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.