EU Parliament Approves Omnibus I Package

What It Means for Sustainability Reporting and Companies

A major shift in EU sustainability legislation, balancing environmental goals with efforts to lessen the administrative burden on businesses.

Introduction

The European Parliament approved a major change to legislation, the Omnibus I package, that significantly alters sustainability reporting and due diligence rules for companies operating in the European Union (EU). This marks a big shift in how sustainability regulations will function in Europe, balancing environmental goals with efforts to lessen the burden on businesses.

What Is the Omnibus I Package?

The Omnibus I package is a simplification and reform measure proposed by the European Commission in February 2025 to streamline and ease sustainability regulations in the EU. It mainly focuses on two key rules:

Corporate Sustainability Reporting Directive (CSRD) — this governs how companies must disclose environmental, social, and governance (ESG) information.
Corporate Sustainability Due Diligence Directive (CSDDD) — this sets requirements for companies to identify and manage human rights and environmental risks in their operations and supply chains.

The Goal: To make these rules simpler and reduce complexity and compliance costs for businesses, especially smaller ones, while still achieving the EU’s sustainability objectives.

Key Changes Under the Omnibus I Package

1. Higher Thresholds for Reporting

Under the revised rules, sustainability reporting under CSRD will now apply only to larger companies, meaning:

Companies with more than 1,000 employees, and
A net annual turnover of over €450 million must report detailed sustainability information.

In simple terms, this means far fewer companies in the EU will need to produce detailed ESG reports than under the original CSRD. Smaller companies are mostly exempt from mandatory reporting.

2. Big Change for Due Diligence Rules

The rules requiring companies to assess and act on human rights and environmental risks (the CSDDD) have also been reduced:

Due diligence requirements will now apply only to very large companies — those with more than 5,000 employees and €1.5 billion in revenue.
The rules will come into force later, starting July 2029.

This marks a significant shift from earlier drafts of the law that proposed wider coverage and earlier implementation.

3. Simplified Reporting Requirements

Not only has the scope narrowed, but the content of what companies must report has also been made simpler. Sector-specific reporting will be optional, and smaller suppliers won’t be required to provide detailed sustainability data to support the reports of larger companies.

Why Is This Change Happening?

According to EU lawmakers, the Omnibus I package aims to:

Reduce red tape and administrative burdens for companies, especially those struggling with complex reporting rules.
Enhance competitiveness in the EU business environment by making compliance simpler.
Focus obligations on the largest companies that have the greatest resources and influence in global markets.

Supporters believe this will help European companies compete globally and lower compliance costs.

What Happens Next?

While the European Parliament has approved the Omnibus I package, it still needs formal approval from the Council of the European Union — the body representing EU member governments — before it becomes law. Once published in the Official Journal, the changes will take effect after about 20 days.

In Summary

The EU’s Omnibus I package is a significant step in reshaping sustainability regulation in Europe. Here’s what it means:

Fewer companies will have to report sustainability data.
Due diligence obligations are delayed and apply only to the largest firms.
Sustainability reporting is simplified to reduce administrative burden.

This reform reflects a broader trend in EU policy: finding the right balance between strong environmental and social goals, and the need to maintain business competitiveness and clear regulations.

Need help navigating the evolving ESG regulations?

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