Update – What Road Will the Omnibus I Follow?

Bus stop - EU Council

The EU Council (i.e. the relevant ministers of the EU's 27 Member States) have reached an agreement on their position on the Second Proposal of the Commission's Omnibus I Initiative aimed at simplifying CSRD (Corporate Sustainability Reporting Directive), CSDDD (Corporate Sustainability Due Diligence Directive) and the Taxonomy. The Omnibus I Initiative was adopted by the Commission on 26 February 2025 and encompassed a 2-track approach by providing two separate, yet interlinked, legal proposals to revise the CSRD/CSDDD, and EU Taxonomy Regulation. Whilst the First Proposal provided a so-called ‘stop-the-clock’ mechanism, the Second Proposal contained material changes aiming to reduce the reporting burden and limiting the trickle-down effect of obligations on smaller companies in order to, allegedly, “boost competitiveness” (for more background, click here). This Second Proposal is now heavily debated by the other EU institutions.

In this blog, we briefly discuss the most relevant changes to the Council’s General Agreement on the proposed revision of the CSRD and CSDDD (CS3D). 

CSRD

With regard to the CSRD, the changes that the Council proposes to the Commission’s Proposal entail:

• Removing listed SMEs from the scope of the Directive;
• A net turnover threshold of over 450 million to further alleviate the reporting burden on undertakings on top of the Commission’s initial proposed 1,000 employee threshold (in combination with either the EUR 50 million net turnover threshold or the EUR 25 million asset threshold);
• An introduction of a review clause concerning a possible extension of the scope to ensure adequate availability of corporate sustainability information.

CSDDD (CS3D)

For the CSDDD, the Council proposes to make the following additional changes: 

• Increasing the thresholds to 5000 employees and EUR 1.5 billion net turnover instead of the original (phased) 1,000 – 3,000 employee threshold and the EUR 450 – EUR 900 million net turnover threshold;
• Postponing the CSDDD's transposition deadline by one year, i.e. 26 July 2028 (instead of 26 July 2027);
• Removing in agreement with the Commission the EU harmonized liability regime and the requirement for Member States to ensure that the liability rules are of overriding mandatory application in cases where the applicable law is not the national law of the Member State;
• Adopting a 'risk-based approach' by focusing on areas where actual and potential adverse sustainability impacts are likely to occur, which is restricted (in accordance with the Commission's proposal) to only direct business partners ('Tier-1');
• Further limiting the obligation to adopt a climate change transition plan (CTP) and restricting supervisory authorities to only advising companies on the design and implementation of those plans; and
• Postponing the obligation to adopt CTPs by two years.

Next stop?

It is up to the European Parliament to further shape this legislative discussion. On 12 June 2025, the European Parliament's Legal Affairs Committee (i.e. JURI) published its draft report on the Second Proposal. This was followed by the voting of the European Parliament's other committees (i.e. ENVI, ECON, INTA, EMPL, and AFET) on their CSRD/CSDDD Omnibus Opinion Reports, which took place on 15 July 2025. The outcome of these reports will presumably be submitted around August 2025, after which the JURI Committee can provide their final report. Subsequently, the European Parliament is scheduled to adopt its final position in October 2025. 

It is expected that there will be some discussions between the EU institutions on the European Parliament’s final position, which will require further inter-institutional negotiation via so-called 'trilogues'. 

So, will the European Parliament aim to further reduce the impact of the CSRD/CSDDD, or push back against the EU Council's position? That remains to be seen.

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