EU’s Second Omnibus Drastically Narrows Scope of Sustainability Reporting

The European Parliament has tentatively agreed with its two largest political groups - the European People’s Party and the Party of European Socialists - to introduce a second Omnibus package that substantially narrows the scope of sustainable reporting obligations.

Under the newly proposed amendment to the Corporate Sustainability Reporting Directive (CSRD), only companies with at least 5,000 employees and a turnover of €1,500 million or more will be subject to the requirements.

This marks a dramatic shift from the initial proposal, which had targeted firms with more than 1,000 employees and a turnover threshold of €450 million.

The revised regulation is slated to come into force in 2027, following earlier delays approved by the European Parliament. In the same legislative move, due diligence requirements-designed to ensure companies address their environmental and social impacts across their supply chains-have also been postponed and given flexibility in national transposition, with member states having until July 26, 2027 to implement them.

Critics argue that the second Omnibus represents a rollback of EU sustainability ambitions. Earlier this year, the European Commission also withdrew its proposal for regulating environmental claims and labels, citing concerns over enforcement and industry pressures. The next stages for the updated text include votes in the Legal Affairs Committee and plenary sessions, with final negotiations expected by year’s end.

EPP-PSE tentative agreement raising CSRD thresholds to 5,000 employees and €1,500 million turnover from the earlier 1,000/€450 million represents very substantial scope reduction. The narrowed scope combined with CSDDD delay through July 2027 transposition captures the wider political rebalancing of EU sustainability regulatory ambition.

For companies previously in scope under the 1,000/€450 million threshold but now out of scope under 5,000/€1,500 million, the strategic question is whether to sustain preparation infrastructure or wind it down. Companies with substantial EU customer or investor exposure typically face voluntary-disclosure pressure regardless of legal requirement; complete wind-down risks costly rebuild if requirements shift again.

For corporates across all CSRD threshold-scenarios, financial institutions with CSRD-scope portfolio exposure and their compliance advisors, Cognitud's ESG strategy and transformation, sustainability due diligence and market intelligence teams help clients evaluate exposure under revised Omnibus thresholds, structure sustainability-reporting infrastructure robust across regulatory scenarios and voluntary-disclosure demand, and prepare disclosures aligned with revised CSRD, ISSB and jurisdictional sustainability-reporting frameworks.