EU Parliament Backs Deeper CSRD and CSDDD Cuts in Omnibus Negotiating Deal

European Parliament lawmakers reached a compromise agreement on a negotiating position for the Omnibus I initiative that proposes deeper cuts to the EU's sustainability reporting and due diligence regulations than originally put forward by the Commission. The deal dramatically narrows the Corporate Sustainability Due Diligence Directive to apply only to companies with more than 5,000 employees and over EUR 1.5 billion in revenues.

The compromise, agreed by left and center parties after intense negotiations, retains the CSRD's 1,000 employee threshold but adds a EUR 450 million revenue qualifier. The CSDDD threshold rises sharply from 1,000 employees under the Commission's Omnibus proposal to 5,000 employees and EUR 1.5 billion in revenues under the Parliament's position. The CSDDD will also shift from an entity-based to a risk-based approach to due diligence. The deal was reached after the European People's Party threatened to align with right-wing parties on an even more restrictive package raising the CSRD threshold to 1,750 employees.

The Parliamentary position is broadly aligned with the EU Council's agreed position on CSRD and CSDDD thresholds and the risk-based due diligence approach, which could accelerate final agreement once inter-institutional negotiations begin. For supply chains globally, including those with Indian suppliers, the key practical implication of the risk-based CSDDD approach is a potential reduction in sustainability audit and disclosure requests flowing down from large European buyers to their smaller international suppliers. The E3G-YouGov survey published separately, however, found that a majority of EU businesses support stricter rules than those under negotiation.

The compromise narrowly reflected a deal supported by the EPP, the Renew Europe group, and conservative parties, but faced significant opposition from left-wing S&D party members. The agreed position was scheduled for a vote in Parliament's Legal Affairs committee followed by a full Parliamentary vote later in the same month, with inter-institutional negotiations with the Council expected to follow. Business groups have called for rapid finalization to provide the regulatory certainty needed for sustainability investment planning across European supply chains.

Key figure — CSDDD threshold raised to 5,000 employees and EUR 1.5 billion revenue under Parliament deal