On 13 November, the European Parliament adopted its position on the First Omnibus Package, a legislative proposal to simplify sustainability reporting and due diligence requirements for businesses.

The draft legislation significantly reduces the number of companies required to comply with key EU sustainability initiatives. This adopted text will now form the basis for negotiations with the Council, known as trilogues.

The Omnibus I Package

The Commission presented the Omnibus I package in February this year. The package proposes changes to several flagship sustainability legislations of the European Green Deal:

  • Corporate Sustainability Reporting Directive (CSRD): Rules requiring companies to report on their environmental and social impacts.
  • Corporate Sustainability Due Diligence Directive (CS3D): Requirements for companies to identify and address human rights and environmental risks in their supply chains starting in 2027.
  • Taxonomy Regulation: The EU’s classification system for environmentally sustainable economic activities, which was adopted in 2020.

These initiatives collectively create a system in which companies must disclose their sustainability performance (CSRD) and take action to improve that performance (CS3D).

This provides investors and stakeholders with standardised data on ESG risks, which informs investment decisions. The system is intended to channel capital toward sustainable businesses, allowing early movers to differentiate themselves in the market.

The push for deregulation is linked to the gradual political pivot of the European People’s Party (EPP) from climate pioneer to Green Deal critic, a shift that began in the months before the 2024 European election and accelerated following it.

The push is fueled by business groups and conservatives arguing that green policies are too costly, a narrative driven by rising inflation, high gas prices, and heightened international competition, particularly from the US and China.

Other countries, notably the US and Qatar, have also expressed concerns about the extraterritorial scope and civil liability provisions of the CS3D, calling on the EU to remove or weaken the directive.

What the European Parliament adopted

The Commission’s initial simplification proposal sought to scale back reporting requirements, suggesting only companies with over 1,000 employees would have to comply with CSRD rules, down from the previous 250 threshold.

The Commission maintained the CS3D’s 1,000 employee threshold but shifted the due diligence requirements to focus primarily on direct business partners, unless plausible information of adverse impacts further down the value chain existed.

The Parliament’s adopted position, reduces the scope and burden even further:

  • The number of companies covered by the CSRD is reduced by a threshold of 1,750 employees and €450 million in revenues.
  • Only the largest companies are left in scope of the CS3D, with a threshold of 5,000 employees and revenues of over €1.5 billion.
  • Companies no longer need to prepare a transition plan to make their business model compatible with the Paris Agreement
  • Liability for non-compliance with due diligence requirements is shifted to the national level, instead of the EU level.

Supporters of the Omnibus package have hailed it as a long-overdue shift toward reducing regulatory burdens to increase competitiveness.

On the other hand, civil society organisations, environmental groups, and many progressive lawmakers have condemned the vote for weakening climate and human rights protections and accused Parliament of bowing to lobbying and far-right alliances.

What are Omnibus bills?

While the EU has previously used omnibus bills to consolidate existing laws for technical updates or administrative simplification without altering their substance, the current “omnibus wave” — which started under the current Commission’s mandate — marks a radical departure.

These new bills serve as vehicles for substantive policy revision, reopening recently agreed laws to push through deregulatory changes while simultaneously bypassing standard democratic safeguards, such as public consultations and impact assessments.

Legal experts have cautioned that Omnibus I risks breaching EU law and that its approval sets a dangerous legal precedent for the rule of law.

What are the vote’s political implications?

In the vote last week, The EPP secured passage of this position by forging an alliance with far-right groups after negotiations with traditional pro-European partners, Renew and the Socialists, collapsed.

The proposal passed with 382 votes in favour and 249 against, relying on support from the Patriots for Europe (PfE), the Europe of Sovereign Nations (ESN), and the European Conservatives and Reformists (ECR).

The EPP’s alliance with the far right and their negotiation tactics faced strong condemnation from across the political spectrum, particularly the left and centrist pro-European groups, as well as civil society organisations.

“Today’s vote marks a sad moment for our European values”, said the Greens’ lead negotiator on the file, Kira Marie Peter-Hansen.

The Left condemned the outcome as a “fascist-Conservative alliance” and warned that this event is “what may yet go down in history as an infamous turning point for Europe, a new alliance formed today between the EPP and the extreme-right”.

The alliance is widely viewed as a breach of the cordon sanitaire, the longstanding agreement among mainstream parties not to cooperate with far-right groups.

The EPP’s decision highlights a new political reality in the European Parliament where the party is willing to abandon its traditional centrist coalition allies and work with whichever side is necessary to achieve its agenda.

What’s next?

The Parliament and the Council will now enter trilogue negotiations, which commence on 18 November, with the aim of finalising the legislation before the end of 2025. Following these trilogues, the provisional agreement will be sent to the co-legislators for formal approval, before being signed and published.

The successful formation of this alliance marks a breakthrough in coordination between the EU’s political center-right and the extreme right, signaling a significant shift in legislative power dynamics.