Negotiations in the European Parliament over the long-awaited EU Sustainability Omnibus package have stalled, raising uncertainty about the timeline for finalizing updates to the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). The Omnibus is designed to simplify overlapping EU sustainability rules and harmonize company thresholds and disclosure requirements.

Tensions emerged over three major issues: whether to maintain mandatory climate transition plans, how to set the employee and turnover thresholds for reporting, and the scope of civil liability under the due diligence directive. The lead negotiator, Swedish MEP Jörgen Warborn of the European People’s Party (EPP), has proposed two compromise packages—one supported by far-right groups that raises CSRD thresholds to 1,750 employees and removes transition plans, and another aligned with the Commission’s original 1,000-employee scope that retains those plans.

Despite pressure from the European Commission and Council of the EU to reach a deal before year-end, political divisions persist. The EPP faces pushback from pro-European groups (Socialists & Democrats, Renew, and Greens), who warn that aligning with far-right blocs could undermine the EU’s sustainability agenda. The JURI committee vote is scheduled for October 13, but it remains unclear which proposal—if any—will move forward.

If talks continue to falter, the Omnibus reforms may be delayed into 2026, prolonging uncertainty for companies already preparing for CSRD and CSDDD compliance.

What This Means for Companies

If the EU fails to finalize the Sustainability Omnibus this year, companies preparing for CSRD and CSDDD will face a period of regulatory uncertainty:

• Reporting thresholds may shift: The current debate could expand or contract which entities fall in scope—ranging from 1,000 to 1,750 employees under the CSRD and 5,000 employees / €1.5B turnover under the CSDDD.

• Transition plan requirements remain contested: Companies should continue preparing for climate transition disclosures even if the final Omnibus text softens them, since both CSRD and ISSB frameworks expect this information.

• Civil liability exposure may vary: If the EPP’s version passes, civil liability rules under the CSDDD could be weaker than initially proposed, affecting enforcement consistency across member states.

• Timeline risk: A delay would push formal alignment and implementation guidance into 2026, complicating cross-framework reporting strategies for multinationals already working toward 2025–2026 CSRD compliance.

Bottom line: Companies should continue aligning with the existing CSRD and CSDDD texts while monitoring the Omnibus negotiations closely, as any political compromise will likely affect both scoping and assurance obligations in upcoming sustainability reports.