Europe Strikes A Deal: Provisional Agreement On The Omnibus I Directive

The European Union has reached a pivotal milestone in its sustainability agenda. After an intense month of trilogue negotiations, the Council and European Parliament have reached a provisional agreement on the Omnibus I Directive, which aims to simplify and streamline both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). This agreement is positioned as a significant step towards balancing the EU's green ambitions with the need to reduce regulatory burdens and enhance competitiveness.

Main elements of the provisional agreement

• CSRD scope: Applies to EU companies with at least 1,000 employees and €450 million in net turnover. For non-EU companies, the threshold is €450 million net turnover generated within the EU, plus either an EU branch or subsidiary generating at least €200 million turnover annually.
• CSDDD scope: Covers EU companies with at least 5,000 employees and €1.5 billion in net turnover. Non-EU companies are in scope if they generate the same net turnover within the EU.
• Review clause: Both the CSRD and CSDDD scopes will be subject to future review, allowing for potential adjustments.
• Exclusion of financial holding companies: Financial holding companies are excluded from the CSRD's scope.
• Relief for stranded "Wave 1" companies: Companies that began reporting for financial year 2024 but will no longer be in scope under the new thresholds are permitted to stop their CSRD reporting.
• Transition plan requirement removed: The obligation to adopt and put in place a climate change mitigation transition plan under CSDDD has been removed. The requirement under CSRD to report on whether a climate transition plan is in place remains.
• Risk-based due diligence: Due diligence under CSDDD is not limited to tier 1 partners but follows a risk-based approach, requiring companies to base their efforts only on reasonably available information.
• Civil liability: No EU-wide civil liability regime under CSDDD is introduced; civil liability remains governed by national law.
• Penalties: A maximum penalty of 3% of net worldwide turnover applies under the CSDDD, with the Commission to provide further guidance.
• Implementation timeline: The CSDDD's transposition deadline is postponed by one year to 26 July 2028. Companies will have to comply with the new measures by July 2029.
• Digital portal: A new digital portal will provide businesses with access to templates and guidelines on EU and national reporting requirements.

Once the final text is released, we will review and report on any additional details.

Cutting red tape, boosting competitiveness

The Danish Minister for Industry, Business and Financial Affairs, Morten Bødskov, described the deal as a "major step forward" for European competitiveness. By focusing on clearer, more targeted rules, he said, companies can now devote more energy to their core business, and to meaningful green investments, instead of paperwork. Rapporteur Jörgen Warborn went so far as to call this the most significant cost-cutting file in EU legislative history.

Both Minister Bødskov and rapporteur Warborn were keen to stress during the press conference that the agreement does not represent a retreat from the EU's green ambitions. They underlined that the green transition remains a central objective, and that the simplification of rules is not about demolishing environmental targets. Instead, the intention is to make it easier for companies to invest in new technologies and renewable energy, and to ensure that sustainability reporting requirements support, rather than hinder, the transition to a greener economy.

Both Minister Bødskov and rapporteur Warborn placed the agreement firmly within the wider context of Europe's economic and geopolitical challenges. They argued that, for too long, the EU had assumed that increasingly complex green regulations would automatically lead to more green jobs and investment. However, as Minister Bødskov noted, "We now know that's not true." Both spokespersons highlighted that Europe is facing mounting competition from both the East and the West, and that the continent's growth and attractiveness for investment have been lagging. The agreement, in their view, represents a major step forward in bringing Europe into a more competitive position globally. By simplifying sustainability rules and reducing unnecessary administrative burdens, the EU aims to create an environment where businesses can thrive, innovate, and contribute to the green transition without being weighed down by excessive red tape.

Regulatory developments beyond the Omnibus

Recent weeks have also seen important developments in related areas of EU sustainability regulation. On 2 December 2025, the European Financial Reporting Advisory Group (EFRAG) delivered its technical advice on the amended drafts of the European Sustainability Reporting Standards (ESRS) to the European Commission. EFRAG is expected to publish the Basis for Conclusions, Explanatory Note, and Cost-Benefit Analysis by the end of December, providing further insight into the changes. The Commission will use EFRAG's advice as the basis for a Delegated Act amending the ESRS, with adoption targeted for mid-2026.

Meanwhile, the Council and Parliament have agreed to delay the EU Deforestation Regulation (EUDR) by 12 months, setting the new application date at 30 December 2026, with an additional six-month extension for small and micro-operators. The Commission is tasked with conducting a simplification review by 30 April 2026 to assess EUDR's impact and administrative burden, potentially leading to further legislative proposals. Under the new rules, only the first operator placing a product on the market will submit a due diligence statement, and micro and small primary operators will benefit from a simplified one-time declaration. The Council and Parliament must formally adopt the deal before year-end, with the Parliament vote set for 16 December.

Separately, on 20 November 2025, the European Commission unveiled proposals for SFDR 2.0, aiming to reduce administrative and disclosure burdens while protecting investor interests through clearer product categories, minimum requirements, and streamlined disclosures. More details are available in our guide.

The Taxonomy Delegated Act remains under scrutiny until 5 January 2026, following a two-month extension. A draft motion for resolution objecting to the Delegated Act was recently rejected, clearing the way for its continued progress.

Next steps

The provisional agreement will now proceed to a vote in the JURI Committee on 11 December, followed by a plenary vote in the European Parliament on 16 December. At the Council, it will be voted on by the COREPER configuration. After the European Parliament adopts its position in the first reading, the Council must then approve the position as well. Thereafter, the text is reviewed for consistency by specialist lawyer-linguists, translated into the 24 official languages, signed by the Presidents of the European Parliament and the Council, and published in the EU Official Journal. We therefore expect to see the adoption of the legislative act by the end of the year with it being published in the EU Official Journal early in the new year.

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