The European Parliament has voted to reduce the scope of key EU sustainability laws. The changes will affect which companies must report on sustainability and follow due diligence rules. Lawmakers also removed the obligation for companies to prepare climate transition plans.
The vote comes after months of debate over the European Commission’s Omnibus I initiative, part of a wider plan to simplify regulations and reduce compliance costs for businesses.
Key changes from Parliament’s vote
The European Parliament adopted the following main changes:
- The Corporate Sustainability Reporting Directive (CSRD) will now cover only companies with more than 1,750 employees and at least €450 million in revenues.
- The Corporate Sustainability Due Diligence Directive (CSDDD) will cover only the largest companies: those with 5,000 employees and revenues over €1.5 billion.
- Companies below these thresholds will not have to provide information beyond voluntary sustainability standards.
- Companies that are in scope will rely on information already available, only requesting additional data from smaller business partners as a last resort.
- The obligation for companies to create a climate transition plan under the Paris Agreement has been removed.
- Liability for non-compliance with due diligence rules will now fall on national authorities rather than the EU level.
The vote passed with 382 in favour and 249 opposed, following the rejection last month of a compromise deal that would have made smaller reductions to the reporting and due diligence rules.
Reactions to the Vote
Sustainable investment groups have criticised the changes. Richard Gardiner, Interim Head of EU Policy at ShareAction, said the vote “risks not only gutting the impact of landmark laws like the CSDDD and CSRD but drives a stake through the heart of Europe’s wider sustainability agenda.”
On the other hand, Omnibus rapporteur Jörgen Warborn said the vote demonstrates that Europe can be both sustainable and competitive. He said: “We are simplifying rules, cutting costs, and giving businesses the clarity they need to grow, invest, and create well-paying jobs.”
Next steps
The European Parliament’s position now differs from that of the EU Council, which had previously aligned with the rejected compromise deal.
Negotiations between Parliament and Council are set to begin next week. Lawmakers aim to finalise the legislation by the end of 2025.
Timeline of key Omnibus updates
- February 2025 – European Commission releases Omnibus I package proposing cuts to sustainability rules to boost competitiveness.
- June 2025 – EU Council adopts a position close to a compromise deal, keeping broader coverage of CSRD and CSDDD.
- October 2025 – Parliament narrowly rejects compromise deal with left-centre parties; EPP sides with far-right parties on a new position.
- November 2025 – European Parliament votes to adopt its new position, dramatically reducing company coverage and eliminating transition plan requirements.
- November 2025 onwards – Parliament and Council negotiations set to begin to finalise the Omnibus legislation.
