Omnibus – EU to reduce sustainability reporting and due diligence requirements

On December 9, 2025, negotiators of the Council of the European Union (Council) and the European Parliament (EP) reached a provisional agreement to simplify the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D) as part of the so-called “Omnibus” package.

According to the press releases of the Council and the EP:

CSRD:

• The CSRD will only apply to EU companies employing on average over 1,000 employees and with a net turnover of over EUR 450 million. Non-EU companies will have to comply with the CSRD if their EU net turnover is at least EUR 450 million.
• Financial holding companies will not have to comply with the CSRD.
• Companies that had to start reporting from financial year 2024 (“wave one” companies) will benefit from a transition exemption and will fall temporarily out of scope for 2025 and 2026.
• The CSRD is further supposed to protect smaller companies with less than 1,000 employees by allowing them to refuse to report information beyond what is set out in the voluntary ESRS standards.

CS3D:

• The CS3D is supposed to apply to EU companies with more than 5,000 employees and a net annual turnover of over EUR 1.5 billion. It will be applicable to non-EU companies if their EU net turnover is at least EUR 1.5 billion.
• Companies having to comply with the CS3D should adopt a risk-based approach and should refrain from requiring unnecessary information from out-of-scope companies.
• The CS3D’s requirement to establish a transition plan to make business models compatible with the Paris Agreement has been abolished.
• Further, the CS3D will not provide for a harmonized civil liability regime. However, violations of the CS3D may lead to fines of up to 3% of a company’s net worldwide turnover.
• Finally, the CS3D’s transposition deadline will be postponed by one year, to July 26, 2028. This means that covered companies will have to comply with the new rules by July 2029.

As a next step, the provisional agreement will move to Council's Committee of Permanent Representatives and to the EP for votes in JURI on December 11, 2025, and in Plenary the following week. Rapporteur Jörgen Warborn anticipates a broad majority in favor at the Plenary. Once adopted, it will enter into force upon publication in the Official Journal.

Assuming that this provisional agreement will be formally confirmed by the Council and the EP, a long-running discussion on how to modify the CSRD and the CS3D will come to a provisional end. Various review clauses in the CSRD and the CS3D will, however, ensure that the discussion on additional changes will pick up again shortly.