Council of EU adopts negotiating position on omnibus sustainability package

The Council of the EU has announced it has adopted its negotiating mandate on the Omnibus I package which proposes targeted amendments to, amongst other things, the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D). The EU has already published Directive (EU) 2025/794 which implemented the "stop-the-clock" proposal, postponing the application date of aspects of CSRD and CS3D.

Key changes to the CSRD proposals in the Council's mandate are:

• Introduction of a net turnover threshold of over USD450 million (in addition to the 1,000-employee threshold) for mandatory reporting under CSRD, to ensure the reporting burden is limited to the largest companies.
• Adjustments to the CSRD review clause, taking account of the proposed change to CSRD's scope and ensuring sufficient availability of corporate sustainability information.

Key changes to the CS3D proposals in Council's mandate include:

• Increasing the threshold for in-scope companies from 1000 to 5000 employees and USD1.5 billion in net turnover.
• Changing the focus of CS3D due diligence requirements from an entity- to a risk-based approach.
• Limiting the obligation for companies to adopt transition plans for climate change mitigation and postponing the obligation to adopt transition plan by two years.

The Council of the EU will now enter negotiations with the European Parliament once the latter has adopted its own negotiating position. The proposed changes will take effect following agreement by the co-legislators and publication in the Official Journal of the European Union.

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