The landscape of corporate sustainability in Europe is facing renewed pressure. The Parliament’s Omnibus rapporteur, Jörgen Warborn (EPP), has released a draft proposal that calls for significantly deeper cuts to sustainability reporting requirements than previously expected. Warborn’s amendments target the European Commission’s Omnibus initiative.
They propose a further narrowing of the scope of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). If adopted, thousands of businesses could be excluded from key EU regulations, raising serious questions about the bloc’s long-term commitment to transparent and accountable ESG practices.
What’s changing in the Omnibus proposal?
Initially introduced by the European Commission in February 2025, the Omnibus proposal aimed to reduce regulatory burdens on businesses across a range of sustainability-related directives, including the CSRD, CSDDD, the Taxonomy Regulation, and the Carbon Border Adjustment Mechanism (CBAM).
Key Commission recommendations included:
- Raising the CSRD threshold from 250 to 1,000 employees, excluding nearly 80 percent of companies previously in scope.
- Aligning the CSDDD to a 1,000-employee threshold, after a compromise lowered it from its originally intended 500.
However, Warborn’s draft goes further by proposing:
- Increasing the threshold to companies with over 3,000 employees and €450 million in turnover.
- Limiting value chain due diligence by allowing companies to explain the absence of data instead of requiring its collection.
- Replacing mandatory climate transition plans with voluntary disclosures.
- Preventing EU member states from introducing more stringent national sustainability due diligence requirements.
These changes mark a significant retreat from the EU’s initial push to embed sustainability into business practice through robust regulation.
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Implications for businesses and the sustainability agenda
The proposed reductions in sustainability reporting requirements would have far-reaching consequences.
1. Narrowed accountability
With thresholds raised, the majority of mid-sized companies would no longer be required to report under the CSRD or conduct due diligence under the CSDDD. This could reduce visibility into corporate sustainability practices across European value chains.
2. Reduced pressure on supply chain transparency
The proposal limits the extent to which larger companies can demand ESG data from smaller suppliers. This could potentially create blind spots in reporting and impede efforts to address human rights or environmental abuses in global value chains.
3. Shift from proactive to reactive climate planning
By removing the requirement for climate transition plans, companies would only report plans if they already exist, reducing pressure to actively develop pathways to net zero.
4. Regulatory divergence risk
Preventing member states from setting higher national standards could limit the EU’s flexibility to respond to region-specific sustainability challenges, particularly in areas of high environmental risk or innovation.
Final thoughts – What’s next for sustainability reporting requirements?
The debate over sustainability reporting requirements is entering a critical phase. Some lawmakers are advocating for a full rollback of the CSRD and CSDDD, while others are defending the existing scope to uphold ESG credibility and Europe’s leadership in corporate sustainability.
This tension between regulatory simplification and long-term responsibility will define the next stage of negotiations. As Warborn put it: “Less red tape and fewer burdens for businesses. That’s how we strengthen Europe’s economy.” For sustainability advocates, however, the proposed changes risk diluting the EU’s ESG agenda just as global expectations for corporate accountability continue to rise.
The future is uncertain, but the direction of travel matters. Whether the outcome is a rollback or a compromise, businesses must prepare now. Staying informed, building internal sustainability capability, and investing in cross-functional ESG literacy will be essential to navigating what comes next.
