In Short

• The EU Council recommends relaxing sustainability reporting rules.
• Climate transition plans should cite reasonable efforts, rather than best efforts, as required under current rules.
• The final decision is likely to be announced in late 2025 or early 2026.

The European Commission introduced a set of proposals, known as the Omnibus package, in February 2025. Recently, the European Council has published its negotiating mandate on the Omnibus. Here is what you need to know.

The purpose of the Omnibus is to simplify specific parts of the EU's two major sustainability laws: the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D).

The package has two main proposals: first, to delay implementation dates; and second, to introduce important changes to the rules, which are currently on the table.

Read More: EU Weighs Omnibus Proposal, Insurers Left Out of CSRD: Report

The Council of the European Union has recently announced its negotiating stance on the second proposal and suggested a narrower scope for companies subject to these rules, as well as a reduction in the detail required for their reporting and due diligence requirements.

Omnibus Mandate: CSRD proposal

The Council has decided to raise the minimum threshold for a company to be covered by the CSRD. It now proposes that only businesses with a net turnover of over €450 million and more than 1,000 employees be included, as opposed to the current threshold of €50 million in turnover or €25 million in balance sheet total.

It also supports removing listed small and medium-sized enterprises (SMEs) from the CSRD’s scope. In addition, it allows companies to withhold sensitive information in certain cases and proposes a wording change to require them to indicate that their plans contribute to a sustainable economy, rather than being strictly compatible with it.

Omnibus Mandate: CS3D proposal

The Council proposes to raise the scope threshold for CS3D even further by limiting the directive to companies with over 5,000 employees and a global turnover above €1.5 billion, instead of the current threshold of €450 million and 1,000 employees. A threshold of €1.5 billion in EU turnover would apply to non-EU companies.

It also said that due diligence assessments focus only on the company’s own operations, subsidiaries, and direct business partners. They only need to assess indirect partners if they have objective and verifiable evidence of risks.

It further recommended that businesses prepare climate transition plans, but with reduced expectations. The plans should cite reasonable efforts, not best efforts as required under the current rules, to contribute to the green transition. There would be no legal duty to implement such plans.

Regarding penalties, the Council proposes capping fines at 5% of a company’s global turnover. It also recommends postponing the start date for CS3D from July 2028 to July 2029.

Also Read: ISSB vs CSRD: Who Sets the ESG Rules of Tomorrow?

The European Parliament is yet to approve the proposals; however, early drafts suggest that it is also considering relaxing the rules. A draft report from the Parliament’s Rapporteur proposes raising the employee threshold for CSRD compliance to 3,000 employees, while keeping the €450 million turnover requirement in place. It also recommends exempting financial holding companies if their subsidiaries are already complying with the rules.

Ends/

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Source: Norton Rose Fulbright