EU Parliament's Negotiator Advocates for More Significant Reductions in Sustainability Reporting Rules
EU Omnibus Proposal Faces Significant Changes as EPP Pushes for Reduced Sustainability Reporting and Due Diligence Obligations
The European People's Party (EPP) has published draft amendments to the European Commission's Omnibus initiative, aiming to significantly reduce sustainability reporting requirements and ease due diligence obligations for companies under key EU regulations such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
The Omnibus regulation proposal, presented by the European Commission on February 26, 2025, aims to simplify and consolidate sustainability reporting and due diligence rules, affecting CSRD, CSDDD, and EU Taxonomy reporting. The EPP's draft amendments, however, propose more drastic changes.
Key points on the EPP's position and the status of the Omnibus initiative include:
- The EPP particularly supports:
- Reducing the number of data points companies must report, targeting a minimum 50% reduction for large companies rather than the Commission's general 25% cut.
- Raising the company size threshold for reporting obligations to potentially 1,000 employees or more, up from the current lower thresholds. This would exempt many medium-sized companies from reporting burdens the EPP deems excessive.
- Postponing or slowing down the implementation of the CSDDD due diligence rules, as political support for CSDDD has weakened, with calls for a possible two-year postponement.
For smaller companies, the EPP's draft amendments state that they should not seek to obtain information from their business partners but rely on information that is already reasonably available for identifying adverse impacts in supply chains. The draft amendments also remove language allowing member states to individually introduce more stringent sustainability due diligence requirements for specific areas such as emerging risks linked to new products or services.
These proposals face pushback from human rights and investor organizations concerned about weakening the sustainability regulatory framework. The Office of the UN High Commissioner for Human Rights (OHCHR) warns that these Omnibus-driven simplifications and postponements could lead to "backsliding" on responsible business conduct standards, weaken protections for human rights, and create regulatory blind spots. Responsible investor groups such as the Principles for Responsible Investment (PRI) urge that while simplification is welcome, it should not come at the cost of undermining the integrity and effectiveness of the sustainable finance framework, including CSRD and CSDDD reporting requirements and due diligence.
The European Banking Authority (EBA) and other regulators have delayed some ESG-related disclosure enforcement timelines in part due to evolving Omnibus regulatory proposals and continued alignment efforts with these changes. The Omnibus initiative remains under ongoing negotiation and consultation within EU institutions as of August 2025.
In a post announcing the release of the proposal, Manfred Weber stated, "I'm entering this process with a clear ambition: to cut costs for businesses and go further than the Commission on simplification. Less red tape and fewer burdens for businesses. That's how we strengthen Europe's economy."
The initial CSRD regulation covered companies with 250 employees, but the Omnibus proposal increased this to companies with more than 1,000 employees, removing an estimated 80% of companies from the regulation's sustainability reporting requirements. The CSDDD was adopted with a 1,000 employee threshold in 2024, but had initially been set to apply with a 500 employee threshold before last-minute changes.
[1] European Commission. (2025). Omnibus Initiative. Retrieved from https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12939-Sustainable-Finance-Omnibus [2] Office of the UN High Commissioner for Human Rights. (2025). OHCHR Statement on EU Omnibus Initiative. Retrieved from https://www.ohchr.org/en/statements/2025/05/28/ohchr-statement-eu-omnibus-initiative [3] Principles for Responsible Investment. (2025). PRI Response to EU Omnibus Initiative. Retrieved from https://www.unpri.org/resources/eu-omnibus-initiative-2025-291236851/ [4] European Banking Authority. (2025). EBA Statement on Omnibus Initiative. Retrieved from https://eba.europa.eu/-/eba-statement-on-omnibus-initiative
- The EPP's proposed amendments to the European Commission's Omnibus initiative aim to reduce the number of data points for large companies under the Corporate Sustainability Reporting Directive (CSRD) by at least 50%.
- Smaller companies, as per the EPP's draft amendments, should not be required to seek information from their business partners about adverse impacts in supply chains, but instead rely on information that is already reasonably available to them.
