Lawmakers in the European Parliament have reached a political agreement on their negotiating position for the EU Commission’s “Omnibus I” initiative—a reform package designed to simplify sustainability and due diligence laws under the EU Green Deal. The agreed position goes even further than the Commission’s initial proposal in reducing the number of companies covered by the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

A Smaller Sustainability Net

Under the compromise deal, Parliament would:

• Keep the CSRD threshold at 1,000 employees (up from the current 250) and add a €450 million revenue requirement, cutting roughly 80% of currently in-scope companies.

• Increase the CSDDD threshold to 5,000 employees and €1.5 billion in revenues, meaning only the largest multinationals would remain covered.

• Shift the CSDDD from an entity-based to a “risk-based” due diligence model, focusing on direct business partners and limiting information requests to smaller suppliers.

These moves substantially narrow both the reporting and due diligence obligations originally intended to reach a much broader share of the European economy.

Political Context

The compromise emerged after weeks of division among Parliament’s political blocs. The center-right European People’s Party (EPP) pushed to ease reporting burdens, while left-leaning parties sought to preserve the original intent of the sustainability laws. Ultimately, the EPP’s “middle ground” prevailed—averting an alliance with far-right parties who favored scrapping the CSRD and CSDDD altogether.

Next Steps

The agreed position will go to a vote in Parliament’s Legal Affairs Committee next week, followed by a plenary vote later this month. If endorsed, this will form Parliament’s mandate for negotiations with the EU Council, whose position already supports similar threshold increases and a risk-based due diligence model.

If adopted in its current form, the Omnibus I package would represent the largest rollback yet of the EU’s sustainability reporting framework, marking a clear shift toward competitiveness and regulatory simplification over broad ESG accountability.