Omnibus Hits the Brakes on Sustainability

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Anna Crawford is a Policy Analyst at the European Policy Centre (EPC) in Brussels. She works for the Sustainable Prosperity for Europe Programme. She previously worked as an EU affairs consultant. Anna is from Stockholm, Sweden.

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.

DIGITAL OMNIBUS • The Commission will present the Digital Omnibus on November 19. It aims to streamline and simplify EU digital regulations including the GDPR and AI Act. Key reforms include a single breach portal, higher reporting thresholds, and delayed enforcement for high-risk AI systems. The package seeks to reduce burdens for smaller companies and unify rules.

The European Parliament’s center and left have already rejected the proposed Digital Omnibus, warning they undermine EU data protections and digital sovereignty. Groups including the Greens, Socialists, and Renew sent letters demanding a reversal and criticized the Commission for yielding to U.S. tech interests.

With the plans controversial across the political spectrum, von der Leyen may have to rely on right-wing support to pass the legislation, as Member States remain divided on GDPR changes.​

UKRAINE • EU leaders are in a tense standoff over a plan to use €140 billion in frozen Russian state assets, held largely by Belgium-based Euroclear, to fund a major loan for Ukraine.

Belgian Prime Minister Bart De Wever continues to resist the proposal, citing significant legal and financial risks if the assets must be returned to Russia. He insists on firm guarantees and shared liability across EU member states.

Ursula von der Leyen is leading talks to unblock the impasse, while highlighting alternatives such as common EU debt or individual national financing. Both options face opposition from highly indebted countries and fiscal conservatives.

With Ukraine potentially facing a cash crisis by early next year, the EU is under mounting pressure to secure funding, making the use of frozen Russian assets the preferred path for most Member States.

UK-EU RELATIONS • The Council of the EU has agreed to start negotiating with the UK over reducing post-Brexit trading frictions, but disputes about Britain’s financial contributions to the EU are straining talks.

France leads demands for the UK to pay into cohesion funds for energy market cooperation, while a high entry fee for the EU SAFE rearmament programme is also contentious.

The UK wants a 50% Erasmus+ discount, but the EU offers only 30%, making negotiations tense and transactional despite both sides seeking rapid progress.​

SMALL PARCELS • EU finance ministers have agreed to introduce customs duties on small parcels from online platforms like Shein, Temu, and Alibaba starting in early 2026, two years earlier than planned. The exemption for goods under €150 will be phased out, with a flat fee to be levied until a centralized customs system launches in 2028.

The current exemption on goods under €150 have resulted in an estimated 65% of small parcels entering the bloc being declared at artificially low values, allowing importers to circumvent customs duties and avoid proper taxation on their shipments.

• Luis Garicano, Bengt Holmström, and Nicolas Petit have unveiled a manifesto for a ‘Constitution of Innovation,’ calling for far-reaching institutional reforms to restore growth as a central priority of the EU project.
• The FT argues that the EU ‘needs to rethink its AI rules.’