Omnibus: What Next as EU Votes to Slash Climate Regulations?

On the evening of 16 December, the European Parliament officially voted to approve the Omnibus package after months of debates and negotiations.

The vote took place at the EU’s Strasbourg HQ and passed with 428 votes in favour, 218 against and 17 abstentions.

The package, which constitutes one of the most sweeping reforms to sustainability legislations ever, will simplify the reporting and due diligence requirements businesses are levied with when operating in the bloc.

In particular, the EU’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) have been scaled back dramatically. Both directives are central pillars of the European Green Deal, the bloc’s framework for climate action.

The reaction from the stakeholders

The news has been met with mixed reactions from different ideological factions. 

“In a rush to close the deal in Strasbourg just days before the winter break, MEPs voted through a sweeping deregulation package which undermines vital climate and human rights safeguards, betraying people and the planet at a time when protections are needed most,” says Eve Geddie, Director of Amnesty International’s European Institutions Office.

“By limiting the due diligence law to only the very largest corporations, the EU is effectively excluding most companies from meaningful accountability, leaving workers, communities and ecosystems without protection and sending a worrying signal that corporate interests are being placed above human rights."

Some politicians have been in favour. “This is an important step towards our common goal to create a more favourable business environment to help our companies grow and innovate,” says Marie Bjerre, Danish Minister for European Affairs.

The view from the European Parliament itself – as summed up by one of the government’s ‘rapporteurs’, Jörgen Warborn – framed the outcome as a positive for European businesses.

“Parliament has listened to the concerns expressed by job creators across Europe,” he says. 

“Backed by a broad majority, today’s vote delivers historic cost reductions while keeping Europe’s sustainability goals on track. 

“This is an important first step in the ongoing efforts to simplify EU rules.”

What changes will the Omnibus bring?

The changes to CSDDD are particularly significant.

The directive's application threshold now rises to companies with more than 5,000 employees and US$1.5bn in annual turnover, reducing the scope to approximately 1,600 companies across the EU.

Obligations to implement climate transition plans have been eliminated entirely.

Maximum penalties have been lowered to 3% of global turnover, while the harmonised liability regime has been scrapped.

The new rules will not be enforced until July 2029 now, too – a significant postponement.

The CSRD will also be “gutted”, according to the European Coalition for Corporate Justice.

Going forward, only companies employing more than 1,000 staff and generating turnover in excess of US$450m will be obliged to report.

For context, this will exclude around 90% of companies currently covered by the directive.

Some member states will now have fewer than just 40 companies subject to reporting obligations.

In sectors with the greatest environmental impact, like agriculture, fishing and mining, the number of affected operators could fall to just a few dozen across the EU.

Allegations of conflicts of interest

The lead in to this vote has been protracted and accusations and recriminations have swirled.

Many people and groups have accused energy lobbyists of having too much influence over the outcome of the decision, while others have decried the EU’s lack of transparency and consultation on the matter.

ExxonMobil’s CEO, Darren Woods, has said that the CSRD and CSDDD would be detrimental to his business, suggesting that the regulations make it “impossible to stay” in the bloc.

"What's astounding to me is the overreach not only requires us to do that for the business that we're doing in Europe, but it would require me to do that for all my business around the world, irrespective of whether it touches Europe or not," he told Reuters at the ADIPEC conference in Abu Dhabi.

Similarly, QatarEnergy, the Middle Eastern country’s premier gas exporter, threatened to cease operations in the EU should the Omnibus fail to pass.

"We can't reach net zero, and that's one of the requirements, among other hosts of things," Saad al-Kaabi, the firm’s CEO, told Reuters.

"Europe needs to understand that, I think, they need the gas from Qatar. They need gas from the US."

The legislative process itself has also been marred by serious questions about transparency.

On 15 December, Transparency International EU and eight other civil society organisations filed a formal complaint against Jörgen Warborn, alleging that he failed to declare his role as President of Small and Medium Entrepreneurs of Europe, a registered lobbying organisation, before assuming his position as Rapporteur on Omnibus I.

"It is deeply alarming to witness how foreign pressure shaped a file that should have been driven by evidence and by the needs of those facing the impacts on the ground,” says Nele Meyer, Director at the European Coalition for Corporate Justice.

“While the protections have been weakened, the core due diligence duty remains. Now the law must be implemented in a way that delivers real protection for people and the planet.”

What comes next for Europe’s businesses?

Once formally adopted by the Council, the changes will enter into force within 20 days of publication in the EU Official Journal.

Member states will have until 2028 to transpose the directive into national law.

However, Omnibus I represents only the first chapter in a broader deregulation agenda.

On 10 December, the Commission presented a new environmental simplification package targeting US$11bn in administrative savings, with six legislative proposals covering industrial emissions, circular economy and environmental assessments.

"EU governments must strengthen key provisions when they incorporate these regulations in national law and use every available avenue to improve protections," Eve says.