Omnibus, from the EU Council a further simplification of CSRD and CSDDD

The Council of the EU has made its position known on the Omnibus package. At its core is always the same mantra: simplify. And in fact, the proposal that the Council will bring to the negotiation with the European Parliament not only provides for the threshold of 1,000 employees for the CSRD , as already suggested by the Commission, but also raises the annual turnover limit to 450 million euros , leaving out thousands of medium-sized European companies.

Also for the CSDDD , the directive on due diligence in the field of human rights and the environment, the Council proposes to raise the thresholds to 5,000 employees and 1.5 billion euros of net turnover. This means that only 6,000 large European companies and around 900 non-EU companies will fall under the directive.

“The promise to simplify EU legislation has been kept,” said Adam Szłapka , Poland’s Minister for the European Union. “We want to create a more favourable business environment, to help companies grow, innovate and create quality jobs.”

The Omnibus I package, published by the Commission in February 2025 and treated as a top priority by the Council, aims to reduce red tape, strengthen proportionality and ensure greater legal certainty for European companies in meeting ESG objectives.

The CSRD, adopted to ensure transparency and comparability in companies' ESG reporting, has raised several criticisms in recent months for its excessive complexity and the disproportionate burdens imposed, especially on SMEs (the starting threshold in fact included companies with 250 employees or 50 million in turnover). The Council responded with a clear mandate: reduce the audiences involved, while maintaining the effectiveness of the information.

In concrete terms, in addition to the exclusion of listed SMEs, the new threshold of 1,000 employees eliminates numerous medium-sized companies from the obligations. To this is added the alternative threshold of 450 million euros of net turnover.

At the same time, however, the Council has inserted a review clause that could lead to a re-expansion of the perimeter in the future, if a significant information gap emerges. The guiding principle remains that of proportionality: ask a lot only from those who can bear the burden, while at the same time promoting a culture of sustainable reporting.

Furthermore, the “Stop-the-clock” mechanism, already adopted in April 2025 , allows for a two-year extension for the application of the CSRD to companies not yet subject to it, providing significant scope for preparation and adaptation, especially in a phase of macroeconomic uncertainty.

Like the CSRD, the CSDDD, which imposes due diligence obligations on human rights and the environment under Directive 2024/1760, has seen a clear reorganization of its scope. The Council has proposed reduced thresholds to 5,000 employees and 1.5 billion in net turnover . The principle is simple: focus regulatory intervention on entities with greater capacity to influence and absorb costs.

The new approach is based on a risk-based logic : companies will have to focus analysis and due diligence on those areas of the supply chain where the risk of negative impacts is higher. It is therefore no longer required to map the entire supply chain in detail, but to concentrate attention on direct commercial partners (tier 1) , unless objective and verifiable elements emerge that justify an extension.

This approach allows for a substantial reduction in the documentation and operational burdens, while keeping alive the ethical and strategic essence of due diligence. Also in this case, a review clause is provided to evaluate possible evolutions of the scope of application.

Furthermore, the Council suggests postponing the deadline for adopting the legislation by one year, until 26 July 2028 , thus giving companies more time to adapt.

Omnibus I is not limited to the two main directives. The simplification also affects the obligations relating to transition plans for climate mitigation . These plans, already foreseen in the Commission proposal, are now further simplified: it is no longer necessary to detail all the implementation phases, but only to demonstrate the existence and coherence of the planned interventions . Supervisory authorities will also be able to provide guidance and advice to companies, thus reducing the margins of regulatory uncertainty.

Finally, on the civil liability front, the Council supported the Commission's proposal to abandon a harmonised regime at EU level, leaving Member States free to regulate any sanction mechanisms , where compatible with national laws.

The Council's aim now is to quickly engage with the European Parliament, in order to find an agreement that is both ambitious and sustainable. The next negotiating phase will therefore be crucial not only for the final form of the directives, but for the entire structure of European ESG governance in the coming years.