What the Omnibus I Shift Means for Future CSRD and ESRS Obligations

Europe just signalled its biggest retreat from mandatory sustainability reporting in years. The European Parliament’s recent vote on the Omnibus I proposal has ignited major debate about the future of CSRD and ESRS reporting in the EU. Although this position is not yet law, it sets the stage for trilogue negotiations that could redefine the scope of Europe’s sustainability reporting rules. The question now is how far these proposed cuts will survive the next steps in the legislative process.

What Was Voted On?

On 13 November 2025, the European Parliament voted 382 in favour and 249 against to adopt its negotiating position on the Omnibus I simplification package.

The European Commission had originally presented Omnibus I as a targeted, technical initiative to reduce administrative burden for companies. However, instead of limited adjustments, Parliament endorsed a far more extensive rollback of sustainability reporting requirements.

This shift was driven by an alliance between centre-right (EPP), right-wing, and far-right parties, marking a clear divergence from the Commission’s more moderate approach.

For companies, this political realignment introduces both risks and opportunities. While lower reporting requirements may reduce compliance and assurance costs, failing to align with broader sustainability expectations could bring reputational, financial, and market-access risks, particularly as investors and consumers continue to place value on transparency.

These proposals now move into trilogue negotiations and remain subject to significant change.

CSRD Scope – Proposed Reduction of More Than 90%

This represents the strictest threshold to date.
If adopted during trilogues, more than 90 percent of companies expected to report under the CSRD would be excluded. For context, a company with 1,750 employees is roughly the size of a mid-tier airline or a regional hospital, which helps visualize the scale of the threshold.

Even More Significant Proposed Rollbacks – CSDDD

The Parliament’s position also proposes drastic reductions to the Corporate Sustainability Due Diligence Directive (CSDDD).

Proposed New Scope

• 5,000+ employees
• €1.5B+ turnover

Further Proposed Changes

• Removal of mandatory climate transition plans
• Due diligence enforcement shifted to national authorities.
• equirement for companies to rely on existing information, limiting requests to SMEs

These changes would limit due diligence obligations to Europe’s largest multinationals.

Additional Proposed Changes

The Parliament’s proposal includes several structural changes:

• Simplified ESRS, reducing qualitative and narrative disclosures
• Voluntary sector-specific standards rather than mandatory ones
• Limits on data requests from SMEs, restricting large companies from demanding information beyond voluntary templates
• Restricted EU Taxonomy reporting, applying only to a smaller number of companies that remain in scope

These changes would reduce both the scope and depth of Europe’s sustainability reporting.

Political Dynamics Behind the Proposal

The vote reflects a shifting political landscape in Parliament. The EPP broke from its traditional centrist alliances and aligned with right-wing and far-right groups to push the Omnibus I position through. Some Renew and S&D MEPs also supported the proposal, enabling its adoption after a failed compromise in October. This newly formed coalition shifted momentum decisively. Critics argue the move undermines sustainability ambitions and weakens the Green Deal, with sustainable finance organisations calling it a “public alliance against sustainability.”

Overall, Parliament’s message was clear: reduce regulatory complexity to boost competitiveness, even if it means scaling back sustainability requirements.

What Happens Next? (Trilogues)

These proposals are not final. They serve as the Parliament’s starting point for trilogue negotiations, which will result in the final law. Trilogue negotiations begin on November 18 and are expected to conclude by the end of 2025.

The Negotiating Positions Going Into Trilogue:

• Parliament: 1,750 employees + €450M turnover
• Council: 1,000 employees + €450M turnover
• Commission: 1,000 employees, no revenue threshold

This institutional disagreement prolongs uncertainty, complicating companies' compliance planning.

What This Could Mean for Companies

If Parliament’s proposal were adopted:

• Only around 3,000 of the largest companies would remain in scope.
• SMEs and mid-sized firms would see reporting pressure fall sharply.
• Data flows across supply chains could weaken.
• Sector comparability may decline.
• Due diligence becomes limited to the very largest companies.
• Climate transition planning requirements disappear entirely.

This scenario carries substantial risks, such as a decline in the quality and consistency of reported sustainability data, increased fragmentation of sector-specific reporting requirements, and diminished comparability for investors and market participants.

Companies may also face reduced incentives for climate transition planning and a loss of alignment in supply chain expectations, leading to weaker investor confidence and less effective sustainability oversight.

If the Council’s position prevails A 1,000-employee threshold would maintain a larger reporting population, though it would still be smaller than under the original CSRD.

Market Pressure Will Outlast Regulation

Even if mandatory reporting shrinks, sustainability data remains essential for bank lending and ESG scoring, supply chain questionnaires, certification programs, insurance underwriting, investor due diligence, and export competitiveness. By 2030, lenders are expected to embed emissions data in all credit models, underscoring the endurance of voluntary demand for sustainable practices. Regulation may shrink, but market demands will persist.

Removing transition plan obligations does not reduce:

• Transition risk
• Physical climate risk
• Investor expectations

Companies that voluntarily maintain transition plans can position themselves for stronger resilience even if such planning is no longer mandatory.

Navigating CSRD and ESRS After the Omnibus Vote

In summary, the Omnibus I vote marks a pivotal moment for EU sustainability reporting, with central questions on regulatory reductions, affected companies, and future obligations. While the details remain undecided, the interplay between policy and market forces makes ongoing sustainability expectations a strategic priority, regardless of the regulatory landscape.

The Omnibus I vote is a turning point in EU sustainability reporting. The debate now revolves around how much regulation will be cut, who will be in scope, and what obligations will remain for companies.

Whether radical cuts or more moderate changes are adopted, the essential lesson is clear: companies will continue to face sustainability expectations from markets and stakeholders, regardless of regulation. Which pathway will future proof your business: opting for minimum compliance or choosing voluntary leadership?

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