EU confirms dramatic cuts in sustainability reporting requirements

The European Commission has confirmed plans to remove 80% of firms from the scope of CSRD, postpone its application, and significantly weaken its sustainability due diligence directive.

Today’s publication of the first Omnibus legislation confirmed the accuracy of the draft leaked earlier this week – and sustainability leaders’ fears that Europe is giving up its leadership on the topic.

On top of drastically cutting the number of firms having to comply with CSRD, the EU’s plan – which still needs to be approved by the European Parliament and Council – also includes postponing this requirement by two years (until 2028) for those that were meant to start reporting next year.

In addition, reporting on sustainability investments aligned with the EU Taxonomy would only remain mandatory for firms of 1,000 employees or more, and made voluntary for smaller firms.

This effectively means that all companies of fewer than 1,000 employees and less than €450 million in turnover would be dispensed from most types of sustainability reporting.

Reacting to the news on professional networks, sustainability leaders all seem to agree that the changes represent a significant weakening of Europe's leading sustainability rules.

CSDDD made “toothless”

When it comes to sustainability due diligence, the Omnibus package amends the CSDDD law approved last year to require due diligence only for direct suppliers and reducing the frequency of periodic assessments from once a year to once every five years.

It also limits the amount of information that may be required by large companies on their value chain partners and removes the civil liability of companies in case of environmental and human rights violations – effectively making the law “toothless”.

"Let’s be clear—this is not simplification, it is full-scale deregulation designed to dismantle corporate accountability and abandon the EU’s Green Deal commitments. Stripping due diligence beyond direct suppliers, scrapping stakeholder engagement, and eliminating civil liability give corporations a free pass to operate without consequences. The Commission is sending a clear message: time to turn a blind eye to forced labour, land grabs, and environmental devastation—leaving victims powerless while reckless corporations walk free," said Nele Meyer, Director of the European Coalition for Corporate Justice.

The Omnibus directive also postpones the application of CSDDD by one year (to 2028).

Opposition to the EU Omnibus

The European Commission’s efforts to simplify sustainability reporting have been widely criticised by civil society organisations, who argue that laws that were passed democratically after years of negotiations should not be amended in a rush and without proper consultation.

Even investors have called on EU legislators to maintain mandatory sustainability disclosures under CSRD and CSDDD, arguing that these provide valuable information to help the sector direct more finance towards the green transition.