EP approves provisional agreement on Omnibus I simplification package

The European Parliament has announced it has approved the provisional agreement with EU governments to simplify sustainability reporting and due diligence obligations under the European Commission's Omnibus I simplification package. This proposes targeted amendments to, amongst other things, the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D), aimed at reducing administrative burdens for businesses. The EU has already published Directive (EU) 2025/794 which implemented the "stop-the-clock" proposal, postponing the application date of certain requirements of the CSRD and CS3D.

In relation to CS3D, key areas of agreement include:

• Reducing the scope of due diligence on adverse impacts requirements by increasing the thresholds to 5000 employees and EUR1.5 billion net turnover.
• Broader and more flexible provisions around identification and assessment of adverse impacts.
• Removal of the obligation for companies to adopt a climate transition plan.
• A maximum penalty cap of 3% of the company's net worldwide turnover, with guidance to be provided by the European Commission and member states.
• Postponement of the transposition deadline to 26 July 2028 (meaning companies will have to comply with the new measures by July 2029).

The provisional agreement also included the introduction of a review clause to enable the possible extension of scope for both the CSRD and CS3D. The Omnibus directive now also needs to be formally approved by the Council of the EU and will enter into force 20 days after publication in the Official Journal of the European Union.

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