Omnibus reforms narrow scopes of CSDDD and CSRD to large businesses

CSDDD also pulled back

Similar reductions apply to the Corporate Sustainability Due Diligence Directive. Under the omnibus deal, only companies with at least 5,000 employees and €1.5 billion in turnover will be required to conduct environmental and human rights due diligence across their value chains.

Critically, forward-looking risk assessments and efforts to establish a common civil liability framework have also been stripped out. What remains is a significantly weakened version of what was once billed as a cornerstone of the EU’s sustainable business agenda.

A divided response

Unsurprisingly, the response has been polarised. Former MEP Richard Howitt, key architect of the EU’s original non-financial reporting directive, called the decision “regressive”, warning that it sets sustainability efforts back by more than a decade.

Green MEP Kira Marie Peter-Hansen echoed this sentiment, labelling the compromise “not simplification, but surrender”. However, legal experts offered a more measured view. ESG lawyer Lucy Blake noted that the compliance risks tied to ESG inaction remain high, especially as national-level laws and civil society scrutiny continue to evolve. “For many companies, the material business risks of ESG neglect haven’t changed,” she said.

What comes next?

The agreed Omnibus position will go to Parliament’s Legal Affairs Committee this week, followed by a plenary vote later in the month. While further amendments are possible, the direction of travel is now clear: a lighter, more targeted EU sustainability regime, at least for the time being.

Regulation may weaken, but business responsibility endures

While the Omnibus package may relieve pressure for some businesses in the short term, the commercial, reputational, and legal risks tied to ESG inaction remain profound. At ISS, we believe companies that move early (building in-house ESG capacity and preparing robust sustainability strategies) will be better placed to manage uncertainty and gain a competitive edge. Explore our accredited sustainability courses online, designed to help you navigate reporting, due diligence, and ESG leadership with confidence and ease. 

Update (24 November 2025): New Parliamentary discussions indicate an even deeper scaling back of both CSRD and CSDDD than initially proposed. Over 90 percent of companies originally covered would now be exempt, climate-transition-plan requirements have been removed, and firms would be restricted from requesting information from smaller suppliers. Civil society groups warn this weakens oversight, while many businesses continue to call for clearer, consistent standards. Parliament will now move into negotiations with Member States to finalise the package.