Lawmakers in the European Parliament have reached an agreement on a negotiating position for the EU Commission’s Omnibus I initiative, which aims for deeper cuts to sustainability reporting and due diligence rules than initially proposed by the Commission.

The deal significantly narrows the scope of the Corporate Sustainability Due Diligence Directive (CSDDD), limiting it to only the largest companies and excluding most others from obligations to address human rights and environmental impacts across their value chains. The Omnibus I package, introduced in February as part of the Commission’s simplification agenda, seeks to enhance EU competitiveness and reduce compliance burdens by revising key regulations including the Corporate Sustainability Reporting Directive (CSRD), CSDDD, Taxonomy Regulation, and Carbon Border Adjustment Mechanism (CBAM).

Among the most notable proposed changes are major scope reductions under the CSRD—raising the reporting threshold from 250 to 1,000 employees, potentially excluding around 80% of companies—and limiting due diligence requirements mainly to direct business partners.

After weeks of political division, a “compromise” backed by centrist and left-leaning parties retains the CSRD’s 1,000-employee scope but adds a €450 million revenue threshold, while increasing the CSDDD threshold to companies with at least 5,000 employees and €1.5 billion in revenue. The CSDDD will also adopt a risk-based rather than entity-based due diligence approach.

The compromise emerged after the European People’s Party (EPP) warned it might side with far-right groups supporting broader rollbacks, including scrapping climate transition plan requirements. The agreed position will be voted on by Parliament’s Legal Affairs Committee next week and then by the full Parliament later this month, with several elements—such as the higher thresholds and risk-based approach—already aligning with the Council’s stance.

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