Next station for the Omnibus I Package: Entering Trilogue Negotiations With the EP's Compromise

On 13 November 2025, the European Parliament (EP) voted on the Omnibus I simplification package proposed by the European Commission on 26 February 2025. Based on the adopted amendments, a majority of the EP supports further simplification of the reporting and due diligence obligations for companies, establishing its negotiating position on streamlined sustainability reporting and corporate due diligence requirements. 382 MEPs voted in favour of the negotiating mandate, 249 against and 13 abstained. The rapporteur of the Committee on Legal Affairs said: 

“Today's vote shows that Europe can be both sustainable and competitive. We are simplifying rules, reducing costs, and giving businesses the clarity they need to invest and create well-paid jobs.”

In this article, we discuss the outcome of the EP’s vote and the potential consequences if this position should hold up in the upcoming trilogue sessions.

Background –Omnibus I

The Omnibus I Simplification Package aims to alleviate concerns about European competitiveness. However, concerns remain regarding the prolonged period of regulatory uncertainty, continued high compliance costs and potential loss of investments to more agile jurisdictions. The vote on 13 November is illustrative of the ongoing regulatory uncertainty facing European businesses. The prospect of further dilution during trilogue negotiations leaves businesses in limbo, unable to determine what compliance frameworks they will ultimately need to implement.

Changes to the CSDDD and the CSRD

CSDDD

For the CSDDD, due diligence obligations will only apply to large companies with more than 5,000 employees and annual net turnover exceeding €1.5 billion. These companies will be required to adopt a risk-based approach to identify and monitor the negative impacts of their actions on people and the environment. 

New is that the EP proposed that in-scope companies should apply a risk-based assessment, focussing on business partners with more than 5,000 employees. Moreover, in-scope companies may only be relying upon data that is "already reasonably available", instead of systematically requesting information from smaller business partners and are only allowed to request additional information in exceptional circumstances. 

The most significant change is that the EP proposes to completely remove the requirement for in-scope companies to draw up and publish a climate transition plan for bringing their business operations in line with the goals of the Paris Climate Agreement. On this point, the EP has created a significant gap between its position and that of the Council. This opens the door for further watering down of the Council’s position on climate transition obligations in the trilogue.

Furthermore, the EP endorses the Council’s proposal regarding the removal of the CSDDD’s initial EU-wide liability scheme. Consequently, causation of any adverse impact on the environment or human rights, as well as compliance with the due diligence obligations – including those relating to business partners – will be governed by the national rules and procedures of each Member State. 

This means that for in-scope companies as well as for companies outside the scope of CSDDD, the issue of local civil liability for violating human rights or other adverse sustainability effects remains. What this entails is demonstrated by various green claims proceedings, alleged forced labor violations, and climate cases against private companies, such as the Dutch Shell-case (which is currently subject to cassation proceedings before the Dutch Supreme Court) and the German ‘Peruvian Farmer’-case.

Of course, fines could be imposed for non-compliance with due diligence obligations, with guidelines to be established by the Commission and the Member States. Violations would be prosecuted at national, not EU, level, and affected individuals would be entitled to full compensation.

Finally, MEPs are also calling on the Commission to establish a digital portal for businesses, providing free access to templates, guidelines, and information on all EU-wide reporting obligations, thus complementing the European Single Access Point.

CSRD

For the CSRD, the EP voted to increase the thresholds to 1,750 employees and €450 million turnover. Furthermore, the EP also endorsed the position of only requiring ‘limited assurance’, instead of obtaining over time the requirement for ‘reasonable assurance’. Interestingly, the disclosure requirement on climate transition plans under the CSRD is not altered by the EP.

The EP also voted to codify the current simplification process of the general European Sustainability Reporting Standards (ESRS). In short, the EP called on the Commission to take the following observations into account when revising the current ESRS through adopting a Delegated Act: remove reporting requirements that are not essential; focus more on measurable data rather than long-written explanations; provide more guidance on the application of the (double) materiality principle so that companies only report on what is relevant; and align the ESRS more closely with other EU laws (including those related to financial services) and global sustainability reporting standards. 

Impact for large companies doing business in Europe

Whilst the proposed ‘simplifications’ de-scope almost 90% of the original in-scope companies, the EP’s position is also met with critical sounds from, amongst others, the ECB, investors, scholars, and (European) companies. 

Briefly put, they fear that the EP’s further-ongoing revision proposal is causing more complexity and also weakening the strong (global) effect of EU law in general, which was traditionally considered to be predictable, reliable, and carefully designed. 

As mentioned in our earlier analysis on the proposed revision of the EU Deforestation Regulation (EUDR), the proposed revisions may result in a regulatory Jenga game as it undermines the original construct of the Green Deal as one holistic integrated ESG package. This could result in an ESG regulatory patchwork in the EU, which at first sight does not seem to increase ‘competitiveness’ as the basic idea of the EU was to create a level playing field within its internal market.

The main issue and unsolved societal problem is that the underlying sustainability issues cannot so easily be de-scoped, which means that violations within the supply chain may continue to cause problems for the upstream company, varying from reputational risks, civil liability, and even regulatory enforcement in case of non-compliance with other more specific ESG rules. These underlying sustainability risks must also be addressed by responsible company directors and perhaps investors, who, without reliable data or evidence of risk-based due diligence, may be reluctant to provide funding. 

In addition, companies may remain subject to other reporting requirements, many of which address topics already largely covered by the CSRD/CSDDD. Even without a mandatory legal framework, having sustainability reporting or a sustainability due diligence mechanism in place may prove useful to address potential risks in a timely manner or serve as defense against alleged accusations by civil parties or regulatory authorities. Also, when making certain green claims, companies must also ensure that the claims they make are actually true, which in the end also requires further knowledge about their supply chain.

Next steps

Negotiations with EU Member States that have already established their position on the proposal in the European Council will begin on 18 November. The aim is to finalize the revision of the CSRD/CSDDD legislation by the end of 2025. 

For more information or further guidance in this area, please contact Pauline Kuipers and Sander Wagemakers.