ESG Reporting: What the EU’s New Omnibus Draft Means

The European Parliament’s Legal Affairs Committee (JURI) has approved a set of draft changes designed to make sustainability reporting and due diligence simpler and more targeted. 

The package narrows which companies must report, shifts due diligence to the largest firms and sets out plans for a digital “one-stop-shop” with free templates and guidance.

Originally, the European Commission proposed cutting the number of companies required by the CSRD to carry out sustainability reporting by 80%.

This draft cuts back further to only companies with more than 1,000 employees and a net annual turnover of more than €450m (US$520m). 

This narrower scope would also apply to sustainability reporting under EU taxonomy rules.

Rapporteur Jörgen Warborn, a Swedish MEP in the European People’s Party, said: “Today’s vote confirms our support for simplification. 

“We are delivering predictability for European companies, with a report that cuts costs, strengthens competitiveness and keeps Europe’s green transition on track.”

What do these new draft rules change?

For companies no longer in scope, reporting would become voluntary, guided by the Commission’s standards. 

To stop large companies from pushing data requests onto smaller suppliers, the draft says big firms cannot demand information beyond the voluntary standards from their smaller partners. 

Sector-specific reporting would also become voluntary. 

Existing standards would be simplified, with emphasis on quantitative information and on lowering both administrative and financial costs.

To support compliance, the Commission would set up a digital portal offering free access to templates, guidelines and information on all EU reporting requirements. 

This would complement the European Single Access Point, the EU’s central hub for financial and sustainability information.

On due diligence, the committee’s position is to limit the rules to very large companies. 

In the EU, that means firms with more than 5,000 employees and net yearly turnover above €1.5bn (US$1.73bn). 

For non-EU companies, the threshold would be net EU turnover above 1.5 billion euro.

Reactions to the EU Omnibus approval

“Good that there is finally more clarity,” says Andreas Rasche, Professor and Associate Dean at Copenhagen Business School, on LinkedIn.

“For many businesses the lack of certainty and predictability was/is a significant problem that holds back action and investments.

“But let’s be clear: this ‘compromise’ didn’t emerge from consensus, but from the EPP’s threat to partner with the far right. That kind of political brinkmanship undermines trust and poisons cooperation in the Parliament.”

Stefan Premer, Director of Consulting at Sphera, says: “There will be a sigh of relief from businesses across Europe, as the agreement reached in the EU Parliament on the EU Commission’s Omnibus initiative brings much-needed clarity. 

“While many had hoped the scope of the Corporate Sustainability Reporting Directive would require companies with 500 employees or more to disclose, the compromise reached a 1,000-employee threshold, excluding 90% of the companies needing to report before. 

“Meanwhile, the scope for the Corporate Sustainability Due Diligence Directive has been significantly watered down to a few large companies with 5,000 employees or more, and even these very few will face no common civil liability regime. 

“Nevertheless, these developments provide long-awaited certainty, allowing business leaders to move forward with preparations for the upcoming reporting standards in line with the simplified ESRS or vSME.”

Mariana Ferreira, Sustainability Policy Officer at the WWF European Policy Office, says: “According to the content of the final report, the major source of dissent among political forces was civil liability, which is scrapped from the Corporate Sustainability Due Diligence Directive. 

“This will severely gut the effectiveness of the law by undermining victims’ access to justice, eliminating enforcement and turning corporate due diligence into a toothless box-ticking exercise.

“The EU cannot afford to continue diluting its climate and nature commitments when faced with mounting ecological and social crises, which in turn are increasingly damaging European livelihoods, economy and cohesion.”

Jan Niewold, EY EMEIA Climate Change and Sustainability Services Leader, says: “The European Parliament’s vote on the Omnibus proposal marks a strategic shift in Europe’s sustainability landscape.

“The Omnibus package is not a retreat from sustainability regulation, but a strategic recalibration aimed at enhancing competitiveness and fostering innovation.

“This shift is designed to empower businesses by reducing administrative burdens and freeing up resources for growth. 

“However, the value of this recalibration will only be realized if firms no longer in scope invest strategically in sustainability and accelerate their net zero efforts.

“If the reduced obligations are simply used to maximise short-term profits or divert attention away from ESG, it risks undermining both sustainability performance and broader societal progress.”

What should businesses do?

“Businesses should assess whether they remain in scope under the revised thresholds and consider the strategic value of voluntary disclosure,” Jan says. 

“Strengthening governance and data integrity through robust internal controls, integrating ESG into corporate strategy and leveraging technology to streamline reporting will be essential to reduce cost and administrative burden. 

“Maintaining a double materiality lens and aligning with global frameworks will also help refine risk assessments and inform strategy.

“Ultimately, the Omnibus proposal opens the door to a more dynamic and opportunity-driven business landscape. Companies that act now - by investing in sustainability, engaging with policymakers and stakeholders and building robust reporting capabilities - will be best positioned to lead in a more transparent, competitive and resilient economy.”

Andromeda Wood, Workiva’s Vice President of Regulatory Strategy, says: “The latest vote brings us closer to clarity, but if the Omnibus process has shown us anything, it’s that a strict focus on compliance is not an effective approach to sustainability management. 

“The complex and ever-changing nature of regulation only reinforces the need for a value-driven approach, one in which sustainability data gives way to a clear view of a company’s risks, opportunities and impacts.

“Business leaders who proactively manage sustainability issues are better positioned to thrive. In fact, nearly 70% of CFOs expect higher returns on sustainability initiatives compared to traditional investments. 

“Meanwhile, consumers are willing to spend 9.7% more, on average, for sustainably produced or sourced goods, and 96% of investors believe sustainability improves financial performance. 

“While negotiations on the CSDDD and CSRD continue, forward-thinking companies are shifting away from meeting minimum requirements to building a robust, integrated system for sustainability management. 

“They are investing in technology to unify their risk, sustainability, and financial data, because having a single source of truth not only makes it easier to adapt to shifting regulations, it produces better insights that strengthen business decisions.

“The key to navigating regulatory uncertainty isn't just following the rules; it's embedding sustainability into core business strategy. With the right tools, companies can transform a regulatory burden into a competitive advantage that enables long-term resilience and value creation.”