BRUSSELS — European Union lawmakers this week sealed a political deal on a sweeping “Omnibus” package that rolls back the Corporate Sustainability Reporting Directive (CSRD) and shrinks the scope of the Corporate Sustainability Due Diligence Directive (CSDDD), after months of pressure from business groups and several governments to cut red tape. Investors and analysts warn the compromise will punch a hole in corporate transparency just as markets are leaning more heavily on sustainability data, Dec. 11, 2025.
Under the provisional agreement between the European Parliament and EU member states, only companies with more than 1,000 employees and at least €450 million in annual turnover will be required to report under CSRD, up from a current threshold of 250 staff and far lower revenue triggers. The CSDDD will apply only to firms with more than 5,000 employees and €1.5 billion in turnover, with EU-level liability stripped out, penalties capped at 3 percent of global turnover and the requirement for climate transition plans scrapped.
Omnibus deal slashes CSRD coverage
EU officials frame the Omnibus package as a “simplification” that focuses rules on the very largest companies and cuts administrative costs by billions of euros. Earlier this year the European Commission estimated that its simplification proposals would remove roughly 80 percent of companies from CSRD’s scope and postpone new reporting waves by up to two years, while revising and slimming down the European Sustainability Reporting Standards that underpin the regime.
That shift caps a two-year trend toward loosening the EU’s flagship disclosure law. In 2023 a legal briefing by Norton Rose Fulbright highlighted how the Commission had already proposed a two-year delay to sector-specific CSRD standards and later phase-ins for non-EU companies. In February 2025 the Commission’s Omnibus proposal, described in detail in an early analysis by ESG Dive, raised CSRD thresholds to 1,000 employees, delayed reporting and triggered a joint warning from major investor groups that reopening the sustainability rulebook risked undermining the Green Deal. The CEPS think tank later argued in a February commentary that the package effectively gutted CSRD transparency and watered down CSDDD before either framework was fully in force.
Those concerns now collide with the final Omnibus deal. A follow-up Reuters analysis quoted European asset managers warning that investors will be left with poorer information, less comparability and fewer credible climate-transition plans to judge which companies are serious about cutting emissions, with one describing the rollback as a “significant weakening of essential sustainability rules.”
What the CSRD rollback means for companies
For companies that remain in CSRD scope, the rules do not disappear so much as narrow. Lawmakers say sustainability reports will become more quantitative, sector-specific standards will be voluntary and a new EU-level digital portal will centralize templates and guidance, while smaller suppliers with fewer than 1,000 employees gain new rights to refuse expansive data requests from large customers.
Business lobby groups have welcomed the changes as overdue relief from what they saw as an overly complex regime, while sustainability advocates argue the EU is trading away its leadership on corporate accountability for short-term competitiveness gains. A Dec. 9 report in ESG Dive and separate coverage from Reuters noted that around 90 percent of companies initially captured by CSRD and 70 percent under CSDDD will now fall out of scope, with the package still awaiting final sign-off by the Parliament and member states later this month.
