European Parliament adopts Omnibus package that further dilutes CSDDD

The European Parliament has adopted the Omnibus package to simplify sustainability reporting and drastically due diligence obligations for EU companies.

After unexpectedly rejecting the European Commission’s Omnibus proposal last month, MEPs finally adopted it today (November 13), with 382 votes in favour of the proposal, 249 against and 13 abstentions.

Along with the adoption, MEPs voted on a series of amendments to the original proposal, which are set to further dilute the Corporate Sustainability Due Diligence Directive (CSDDD). Among the adopted amendments, MEPs voted to reduce the scope of CSDDD to companies with more than 5,000 employees (instead of 1,000) and €1.5 billion in turnover.

They also chose to delete the CSDDD obligation for companies to adopt a climate transition plan, going further than the previous draft rejected in October. However, companies could still face fines for not complying with due diligence requirements, with guidance to be provided by the European Commission and member states.

The directive will now move to trilogue negotiations from November 18, between the European Parliament and Council, which adopted a similar position in June – except on climate transition plans.

“This means on climate ambition the European Parliament is not aligned with the Council of the European Union ... which opens the door for further watering down in trilogue,” warned Richard Gardiner, Interim Head of EU Policy at ShareAction.

CSRD scope also reduced

Beyond the changes to Europe’s sustainability due diligence requirements, MEPs have also agreed to lift the application threshold for the Corporate Sustainability Reporting Directive (CSRD) – from 1,000 employees to 1,750 employees “on average”, while maintaining the €450 million turnover threshold.

In addition, reporting standards (namely the European Sustainability Reporting Standards or ESRS) would be further simplified, requiring fewer qualitative details, and sector-specific reporting would become voluntary. Smaller companies would also be protected from the reporting requirements of their large business partners, which would not be allowed to request more information than what is set out in the voluntary standards.

Rapporteur of the Legal Affairs Committee Jörgen Warborn (EPP, SE), who was previously accused of coercing MEPs to adopt the text by threatening an alliance with the far right, said: ”Today’s vote shows that Europe can be both sustainable and competitive. We are simplifying rules, cutting costs, and giving businesses the clarity they need to grow, invest, and create well-paying jobs.”