EU Parliament Green-lights Major Cuts to Sustainability Reporting Laws

The European Parliament has formally approved the Omnibus I package, marking a major shift in corporate sustainability regulation across the European Union. The legislation significantly reduces the scope of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), raising thresholds so only the largest companies will have mandatory obligations.

Under the revised framework, only companies with more than 1,000 employees and net annual turnover exceeding €450 million will be required to file sustainability reports under the CSRD.

This excludes a substantial number of firms previously expected to report on environmental, social and governance performance, narrowing who must disclose detailed sustainability data. The adjusted due diligence obligations will take effect in 2029 and apply only to companies with over 5,000 employees and €1.5 billion in turnover.

Supporters of the changes argue that simplifying these requirements and reducing administrative burdens will strengthen EU competitiveness by making compliance more manageable for large enterprises. They also note that focusing reporting on the largest and most impactful companies could concentrate resources where they yield the most benefit, facilitating clearer and more actionable disclosure.

Critics - including environmental advocates and civil society organisations - contend that the cuts undermine the original intent of EU sustainability laws by weakening transparency and reducing accountability for corporate social and environmental impacts. They warn this could hinder progress on climate and human-rights goals at a time when transparency is seen as critical for investors and stakeholders.

Major CSRD cuts don't eliminate the substantive reporting obligations - they narrow scope while raising strategic questions about voluntary disclosure for out-of-scope firms with EU customer or investor exposure. Our ESG-strategy and sustainability-due-diligence teams help clients evaluate what revised CSRD scope means for their reporting infrastructure.