EU member states in the European Council have given final approval to the “Omnibus I” simplification package, a major legislative step that significantly scales back sustainability reporting and due diligence obligations for companies across the bloc.

Under the approved framework, the scope of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) will be substantially narrowed, removing the majority of companies from mandatory sustainability obligations compared with current rules and earlier Commission proposals.

Key changes include:

• CSRD scope dramatically reduced, with reporting only required from companies with more than 1,000 employees and at least €450 million in annual revenue – a threshold that excludes around 90 % of firms previously covered.

• CSDDD due diligence obligations limited to companies with over 5,000 employees and €1.5 billion in revenue, significantly shrinking the pool of firms required to carry out human-rights and environmental risk due diligence.

• Mandatory climate transition plans removed from the CSDDD requirements.

• Deadline for CSDDD compliance postponed to July 2029.

• Companies within scope must rely primarily on reasonably available information and may limit reporting requests to smaller suppliers to avoid disproportionate burdens.

Supporters argue the reforms simplify regulatory requirements, cut red tape, and boost European corporate competitiveness. However, the extensive rollbacks also raise concerns among ESG advocates about reduced transparency and weakened safeguards for environmental and human rights impacts.

The updated directive will be published in the EU’s Official Journal and enter into force 20 days after publication.