The EU Omnibus Directive, a sweeping initiative to simplify sustainability reporting, has ignited growing resistance across the corporate sustainability landscape. Over 275 organisations, including leading companies, investors, and financial institutions, have signed a joint statement urging the EU to preserve the integrity of key ESG regulations.
These include the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Amid rising capital costs and regulatory fatigue, the Omnibus EU Directive aims to cut reporting obligations by 2 percent for large private firms and 35 percent for SMEs. However, business leaders and ESG advocates argue the proposal goes too far, setting back the EU’s green ambitions by a decade.
What is the EU Omnibus Directive?
The EU Omnibus Directive, referred to as Omnibus I, is a legislative package aimed at streamlining EU rules across several domains, including CSRD reporting requirements and CSDDD requirements. However, simplification, critics say, is veering into gutting vital provisions.
Under current proposals:
- The CSRD’s application threshold would exclude firms with fewer than 1,000 employees, despite prior expectations that it would apply to those with over 500 staff and €450m turnover.
- The requirement for companies to implement climate transition plans could be scrapped altogether.
- Elements of the CSDDD EU framework, such as risk-based due diligence aligned with OECD and UN principles, are at risk of dilution.
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“A paper map, not a GPS”: Calls for smarter simplification
The open letter, coordinated by Eurosif, the Institutional Investors Group on Climate Change (IIGCC), the Principles for Responsible Investment (PRI), CLG Europe, the Global Reporting Initiative (GRI) and E3G, pushes back against what many see as a de facto deregulation of the EU’s sustainable finance framework. Signatories include EDF, Allianz, Nokia, IKEA’s Ingka Group, Triodos Bank, and Oatly, alongside advocacy coalitions such as the GRI and the Corporate Leaders Group Europe.
Tsvetelina Kuzmanova, EU sustainable finance lead at CISL, described the move as “swapping GPS for a paper map,” warning that the current trajectory “falls below the standards already adopted by leading companies.” She added that forward-looking ESG regulations must support innovation and competitiveness, not dilute them.
Five recommendations to preserve ESG integrity
In their letter, signatories urge EU policymakers to focus on improving implementation rather than eroding substance. Their five key calls include:
- Maintaining double materiality reporting across ESG topics.
- Retaining CSRD’s scope for companies with 500+ employees.
- Preserving the requirement for credible climate transition plans.
- Enabling value chain data sharing beyond VSME standards.
- Upholding the core risk-based elements of the CSDDD.
These elements, they argue, are foundational to Europe’s ambitions under the Clean Industrial Deal and Sustainable Finance Action Plan.
Final thoughts – A critical moment for EU sustainability
The backlash against the Omnibus Directive shows how high the stakes are for corporate sustainability. Business leaders are not rejecting simplification, but they are urging Brussels to strike a balance that maintains regulatory clarity, market confidence, and ESG leadership.
At a time when global markets are demanding greater accountability, weakening the EU’s ESG framework could create more confusion, not less. Want to stay ahead of evolving EU reporting frameworks? Explore our CSRD training for businesses to equip your teams with the knowledge and tools to navigate CSRD, CSDDD, and the broader shift toward transparency in the EU.
Dedicated to harnessing the power of storytelling to raise awareness, demystify, and drive behavioural change, Bronagh works as the Communications & Content Manager at the Institute of Sustainability Studies. Alongside her work with ISS, Bronagh contributes articles to several news media publications on sustainability and mental health.
