The European Parliament has formally approved the Omnibus I legislative package, marking a significant shift in the European Union’s corporate sustainability regulatory framework by scaling back reporting and due diligence obligations for companies. The provisional agreement negotiated between the Parliament, Council, and European Commission simplifies key elements of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), aiming to ease compliance burdens and support competitiveness.

Under the updated rules, mandatory sustainability reporting will apply only to companies with more than 1,000 employees and annual net turnover exceeding €450 million, narrowing the scope of CSRD obligations. Due diligence requirements under CSDDD will be limited to significantly larger firms with over 5,000 employees and turnover above €1.5 billion, delaying application until 2028. Smaller companies will be exempt from mandatory reporting and due diligence, with voluntary standards offered instead.

The reforms also streamline reporting content by reducing the number of required data points and removing sector-specific reporting mandates. Provisions for a digital portal with templates and guidance intend to simplify compliance further. The legislation still requires formal final approval from the Council of the EU before entering into force.

Supporters argue the Omnibus I package reduces complexity for businesses and enhances EU competitiveness while preserving core transparency goals. Critics caution that narrowing the regulatory scope may weaken corporate accountability and slow progress toward climate and human rights commitments.