EU Parliament Adopts Its Omnibus Position

On October 13, 2025, the European Parliament Committee on Legal Affairs (JURI) voted on its position on Omnibus I, the European Commission's proposed simplification package for some significant portions of the Green Deal, including the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

The Commission's original proposal for the scope of CSRD was at least 1,000 employees and turnover of €50 million, which would have brought it into agreement with the scope of the CSDDD. The Parliament's position retains the requirement for at least 1,000 employees but raises the turnover to €450 million, excluding more companies from reporting requirements and bringing it into line with the position adopted by the European Council. It will also have exemptions for financial holdings and listed subsidiaries.

The Parliament's position is similar to that of the European Council in most respects, with a few exceptions. For example, while both the Commission and the Council had proposed deleting the CSRD's mandate for developing sector-specific standards, Parliament has proposed the development of voluntary sector-specific guidelines. All three parties proposed a cap on information requests related to the voluntary standard for very small- and medium-sized companies (VSME).

“SMEs will find new protections that will prevent reporting companies from demanding excessive information,” said Jon McGowan, a Florida-based attorney working on global sustainability law, in a statement to 3E. “This will drastically reduce sustainability reporting obligations. Mandatory sector-specific standards will be removed, but there is a possibility a voluntary framework will be developed.”

Regarding the CSDDD, the Commission had originally proposed no changes to its scope of 1,000 employees and a turnover of €450 million. However, Parliament and the Council propose a limit of 5,000 employees and a net turnover of €1.5 billion. The Parliament also followed the Council's approach in eliminating the civil liability scheme that would allow for class-action lawsuits against companies violating the CSDDD. Further, while the Commission and the Council had proposed limiting information requests to Tier 1 partners along the supply chain and adopting a risk-based general scoping exercise to identify areas where violations are most likely to occur, the Parliament has eliminated the Tier 1 requirement and opted instead for an entirely risk-based approach.

“I'm really happy about the outcome we had in JURI today,” said European People's Party (EPP) lead negotiator Jörgen Warborn, whose majority party is leading the negotiations, during a press conference. “It shows that the European Parliament shows great support for simplification.”

The Parliament proposed no changes to the requirement under CSRD for companies to have climate transition plans. For the CSDDD, the Parliament retained the obligation for climate transition plans but removed the requirement for legally binding implementing actions that outline exactly what steps they will include.

Warborn emphasized that while the requirement for climate transition plans has been weakened, the EPP continues to support the target of achieving net-zero emissions by 2050, but that it will be important to take a partnership approach with businesses to achieve that goal and not an adversarial or punitive one.

“We have to coordinate and collaborate with companies and use the carrot more than the stick,” said Warborn. “If we use the stick, then they will leave to other places and invest in other parts of the world. That is why we need simplification, to make sure that European companies stay here and continue to invest here and then reach the 2050 targets. If we don't, we will not reach the targets.”

The final vote tally was 17 votes in favor, six votes against, and two abstentions.

There will be a final plenary vote on the position on October 20, 2025, after which the Council, Parliament, and Commission will engage in trilogue negotiations, with a likely adoption of the final Omnibus reforms by the end of 2025 or the beginning of 2026.

Sharp Diplomacy Yields Certainty and Hostility

Negotiations on the Omnibus have been strained since it was first proposed on February 26, 2025, although tension has risen dramatically in recent weeks.

Left-leaning parties like the Socialists and Democrats (S&D) and Renew Europe have advocated minimal changes to the regulations and preserving as much as possible of the Green Deal. In contrast, right-leaning parties such as the European Conservatives and Reformists (ECR) and the Patriots for Europe - newly empowered after their success in the last parliamentary elections - pushed for complete deregulation.

Warborn delivered two proposals: one aligned with the centrist position of the Council and the other more closely aligned with the deregulation demands of the right. In doing so, Warborn delivered an ultimatum to the left that if they didn't move their position and adopt the centrist proposal, he would get support for the more severe proposal from the right. The left consequently dropped its opposition and adopted Warborn's position, prompting MEP Lara Wolters, a member of the Progressive Alliance of Socialists and Democrats (S&D) in the European Parliament, to resign her position as shadow rapporteur and lead negotiator for S&D.

Warborn defended his sharp diplomacy as the best way to reach a compromise between the divergent positions of the parties involved.

“I think it is very good that they are now on track on the simplification agenda together with the EPP,” said Warborn. “I look very much forward to working together with them in the trilogue in order to achieve an end result that will create growth for European businesses and good paying jobs.”

However, Julia Otten, senior policy officer at Frank Bold, said in a webinar that Warborn's approach violates the democratic foundation of the European Union.

“It's very damaging for the democratic culture you have in the Parliament,” said Otten. “What does this mean? You don't negotiate a compromise but you force other parties into a compromise by leaning into this anti-EU majority? I think that's very, very concerning and unacceptable as a negotiation tactic in a democratic parliament.”

Sustainability Advocates Criticize Inevitable Outcome

With two of the three parties in the trilogue largely aligned in their positions, there would appear to be some certainty about what the final Omnibus agreement will look like.

“With the adoption of the Legal Affairs Committee's compromise proposal, we have a much clearer picture as to the future of sustainability reporting in the EU,” said McGowan. “While there are more negotiations to follow, the Council, Commission, and Parliament agreed on multiple key aspects that we can safely assume will be in the final directive.”

Supporters of stronger regulation have expressed concern that loosening the requirements, particularly for the CSDDD, will have significant repercussions along the supply chain.

“Lawmakers should spare no effort in the next phase of the negotiation to strengthen the law and possibly reintroduce civil liability at the European level,” said Hélène de Rengervé, senior advocate for corporate accountability at Human Rights Watch in a press release. “Not doing so would rubberstamp a race to the bottom that would have real, global consequences.”

The Fair Trade Advocacy Office (FTAO) wrote in a press release that the JURI committee has betrayed smallholder farmers.

“The CSDDD, as originally legislated, could deliver for smallholder farmers, artisans and responsible businesses, providing essential protection against the risks and negative impacts of corporate operations throughout supply chains,” said the FTAO statement, emphasizing that a strong CSDDD could help prevent exploitation, ensure fair treatment, and guarantee that those working at the base of global supply chains have access to remedies to defend their rights.

Professor of Business in Society and Associate Dean at the Copenhagen Business School Andreas Rasche said in the webinar that the simplification of the CSRD represents a significant step backwards in the development of a sustainable European economy.

“We're moving back into a world of voluntary disclosures and most of all also bilateral disclosures,” said Rasche. “We will see a lot of disclosures between companies and between buyers and suppliers, but all of this is probably not standardized very much because the frameworks will not be applied consistently.”

Rasche said that the end result of the process will be an economy in which there is less transparency and accountability between businesses and consumers.

“I think the decision or the agreement that we have on the table - and where we will likely land with the CSRD - is absolutely not satisfactory, neither from the perspective of investors nor from the perspective of companies themselves.”

McGowan also anticipates that the certainty of what the final simplification will look like could have a significant impact on the sustainability industry.

“For companies with fewer than 1,000 employees and under €450 million annual net turnover, they can begin to reprioritize their sustainability efforts to just meet the minimums required under the VSME standards,” he said. “I expect this will result in a drastic reduction of staff in the sustainability sector, as companies are no longer faced with mandatory reporting requirements, either directly or indirectly. Sustainability advocates will continue to push for voluntary reporting, but the financial costs may make that a futile effort.”