Lawmakers in the European Parliament and the Council of the European Union have reached a provisional agreement to simplify and reduce corporate sustainability reporting and due diligence requirements under the Omnibus I package, part of ongoing legislative reforms of the EU’s flagship ESG compliance framework.

The new deal significantly reduces the number of companies subject to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). It also eliminates the requirement under the CSDDD for companies to prepare climate transition plans, and removes the EU-wide liability regime previously envisaged for non-compliance, shifting enforcement to national authorities.

Key changes reflected in the provisional text include:

• Scope thresholds for sustainability reporting under CSRD based on staff numbers and revenue;

• A reduced universe of companies covered by due diligence obligations under CSDDD;

• Removal of mandatory climate transition planning requirements; and

• A cap on potential penalties set at a percentage of global revenues for covered entities. 

Proponents argue the deal will reduce regulatory burdens and enhance competitiveness by making compliance simpler for larger firms, while preserving essential environmental and social safeguards. Critics, including environmental advocates and some investor groups, have warned that scaling back scope and enforcement could weaken corporate accountability and transparency on sustainability performance.

The provisional agreement reflects a broader recalibration of EU sustainability law, balancing stakeholder concerns about administrative complexity with ongoing commitments to corporate accountability for environmental and human rights impacts. Adoption of the finalized text still requires formal approval by both the Parliament and member states.