Editorial

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This week the European Parliament passed a vote to cut sustainability reporting and due diligence laws.

The Sustainability Omnibus Act was proposed on 26 February 2025, pushing for cuts to sustainability regulations as outlined in the Corporate Sustainability Due Diligence Directive (CSDDD) and Corporate Sustainability Reporting Directive (CSRD) to ease the
burden on smaller businesses, and focus on regulating larger companies with significant climate impact.

On 10 October the Omnibus saw a majority agreement in Parliament, and on 13 October the law was passed, effectively simplifying sustainability regulations in the EU.

The Omnibus Act aims to reduce administrative burdens by 25% for EU companies and 35% for SMEs. The proposed changes are estimated to reduce administrative costs by €4.4 billion annually, and exempted firms are estimated to save €1.6 billion from CSRD/ESRS,
and €0.9 billion in taxonomy-related compliance costs.

The Act consists of the following changes to sustainability reporting:

  • Only companies with over 1,000 employees, a turnover over €50 million, or a balance sheet over €25 million will remain beholden to CSRD, removing 80% companies from complying with the regulation.
  • Companies with 5,000 employees and above or €1.5 billion in revenue will remain under the scope of CSDDD.
  • Businesses under the scope of CSRD will need to enhance reporting over climate and risk analyses as well as decarbonisation, and large companies complying with CSDDD will be made accountable for human rights and environmental harms in their supply chains.
  • Small businesses in the value chain will not be subject to reporting requirements of large companies – the European Commission will adopt a voluntary reporting standard drawn from EFRAG for SMEs.
  • The European Sustainability Reporting Standards (ESRS) will be simplified so that only large companies fitting the above description will need to comply.
  • Sector-specific standards will no longer be adopted, and the assurance requirement will remain at the level of “limited” assurance.
  • Under the EU Taxonomy, companies with over 1,000 employees and €450 million net turnover will be obliged to report, with other large companies allowed to report voluntarily.

The ‘stop the clock’ motion adopted in April will delay the CSRD and CSDDD timelines. Companies in the second wave obligations for CSRD will be pushed to report in 2027 instead of 2025, and companies in the third and fourth waves will similarly be delayed.
Member states will have until 26 July 2027 to put CSDDD into law, pushing the application deadline for the first wave of in-scope businesses to 2028.

There have been mixed reactions to the changes, MEP Kira Marie Peter-Hanson of Denmark’s socialist party saying to

Edie, “This is not simplification – it’s surrender. The deal weakens accountability, betrays public trust, and sends the wrong signal to both citizens and companies. We call on our colleagues in S&D and Renew to object to these blackmailing tactics, and
give Europe a chance for a law with accountability.”

Andie Wood, vice president of regulatory strategy at Workiva, commented on how the act will impact businesses: “The latest vote brings us closer to clarity, but if the Omnibus process has shown us anything, it’s that a strict focus on compliance is not an
effective approach to sustainability management. The complex and ever-changing nature of regulation only reinforces the need for a value-driven approach, one in which sustainability data gives way to a clear view of a company’s risks, opportunities and impacts.”

Wood added: “While negotiations on the CSDDD and CSRD continue, forward-thinking companies are shifting away from meeting minimum requirements to building a robust, integrated system for sustainability management. They are investing in technology to unify
their risk, sustainability, and financial data, because having a single source of truth not only makes it easier to adapt to shifting regulations, it produces better insights that strengthen business decisions. The key to navigating regulatory uncertainty
isn’t just following the rules; it’s embedding sustainability into core business strategy. With the right tools, companies can transform a regulatory burden into a competitive advantage that enables long-term resilience and value creation.”

Is the Omnibus act a step forward or a step back for keeping corporations responsible for their sustainable impact? It remains to be seen. However, we are seeing a domino effect in pullback of sustainable initiatives in the EU, as seen with the
collapse of the Net Zero Banking Alliance earlier this month.

Mega-corporations contribute $28 to climate damage, according to the
Associated Press, and 80% of the world’s carbon emissions can be traced back to

only 57 companies – these companies must be held responsible for their actions. Worldwide, sustainable efforts are being moved to the backseat, when now it is more vital than ever for them to remain a priority.