Introduction
In response to widespread concerns about the administrative burden imposed on companies, the European Commission presented its Omnibus Simplification Package on 26 February 2025. This package aims to strengthen the EU’s competitiveness by significantly simplifying sustainability reporting and reducing due diligence burdens arising under the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the Taxonomy Regulation.
The Omnibus I Package includes three important legislative proposals:
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a proposal to immediately postpone application of the CSRD and CSDDD (“Stop the Clock”);
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a proposal to amend the scope of, and obligations under, the CSRD and CSDDD; and
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a proposal to amend certain delegated acts under the Taxonomy Regulation.
Status update
On 17 April 2025, the “Stop-the-Clock” Directive entered into force (see here). Member States have to transpose this Directive into national law by 31 December 2025.
As explained in a previous article, the proposed substantive amendments to the CSRD, CSDDD and the delegated acts under the Taxonomy Regulation are still, however, under review by the European Parliament and the Council.
On 23 June 2025, the Council agreed its negotiating position regarding the substantive proposal (see here). This position will be the basis for its negotiations with the European Parliament to finalise the Omnibus proposal.
Main substantive changes proposed by the Council to the CSRD compared to the Commission’s proposal
Significantly reduced scope
The scope of the CSRD is further limited. The reporting requirements would only apply to undertakings with net turnover exceeding EUR 450 million (instead of EUR 50 million) and an average of more than 1,000 employees during the last financial year. The Council is thus increasing the financial net turnover threshold while maintaining the Commission’s 1,000-employee threshold.
Revised review clause
When preparing its review report, it’s proposed that the Commission should assess the appropriateness of any possible extensions of the scope of the CSRD based on an analysis of the needs for sustainability data to mobilise private investments towards EU Green Deal objectives and the influence of sustainability reporting on the competitiveness of EU undertakings. Also, when evaluating a possible extension of the scope, it’s proposed the Commission should have to consider the possibility of establishing a “simplified reporting regime”.
Transition plan
It’s proposed that the requirement to disclose any existing transition plan aimed at ensuring that the company’s business model and strategy “are compatible with” the transition to a sustainable economy, should be slightly amended. Instead, the transition plan should ensure that the company “contributes” to that economy.
Main substantive changes proposed by the Council to the CSDDD compared to the Commission’s proposal
Transposition deadline
The “Stop-the-Clock” Directive postponed the original deadline for transposing the CSDDD into national law by one year (26 July 2027 instead of 26 July 2026). The Council proposes a further one-year postponement, setting 26 July 2028 as the new deadline. The first-time application for all companies would also be deferred to 26 July 2029.
Significantly reduced scope
While the CSDDD’s scope was not covered by the Commission’s proposal, the Council’s mandate increases the thresholds for EU companies to 5,000 employees (instead of 1,000 employees) and net turnover exceeding EUR 1.5 billion (instead of EUR 450 million). The CSDDD would also apply to third-country companies generating net turnover in the EU of more than EUR 1.5 billion (instead of EUR 450 million).
Risk-based approach
The entity-based approach, where due diligence requirements are limited to the company’s own operations, those of its subsidiaries, and those of its direct business partners, will be replaced by a risk-based approach. It is proposed that companies should be required to conduct a scoping exercise to identify areas where adverse impacts are most likely to occur. Moreover, they should no longer be required to carry out a comprehensive mapping exercise but, instead, to conduct a more general scoping exercise. Consequently, companies should look beyond their direct business relationships where they have, or can be reasonably expected to know of, objective and verifiable information that suggests an adverse impact at the level of an indirect business partner.
Transition plan
The Council proposes replacing the requirement to “put into effect” transition plans with an obligation only to “adopt” such plans, adding as clarification that the plans must outline implementing action. It also proposes softening the substantive requirements of transition plans by requiring only “reasonable” efforts instead of “best efforts”. Finally, the Council’s position proposes postponing the obligation to adopt a transition plan by two years (hence until 26 July 2031), with it remaining voluntary until then.
Next steps
The Member States have to transpose the “Stop-the-Clock” Directive into national law by 31 December 2025.
The Council’s position represents a decisive step in implementation of the amended substantive sustainability rules. The Parliament and the Council will enter into tripartite negotiations with the Commission to find a common final agreement once the Parliament determines its own negotiating position.
