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December 2025 has brought a pivotal shakeup in European sustainability regulations. On December 9, 2025, European legislators reached a provisional agreement on the Omnibus I simplification package, amending both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D). The final text of the agreement has not yet been published. Nonetheless, the press releases from the co‑legislators already outline the main amendments. They reflect ongoing efforts to reduce administrative burden and enhance EU competitiveness, while recalibrating sustainability obligations for companies operating in the EU.
This latest regulatory development builds on trends discussed in our prior analysis. Below, we break down these changes and the key takeaways for companies.
Corporate Sustainability Reporting Directive (CSRD)
- Scope: the scope now covers only EU companies with over 1,000 employees and net annual turnover exceeding €450 million, as well as non-EU companies with an EU turnover exceeding €450 million.
- Exemptions: listed SMEs and financial holding undertakings are now exempt. The CSRD will also include a "transition exemption" for "first wave" companies (i.e. that started reporting for FY 2024) but will now fall out of scope of the Directive.
- Simplified Reporting Requirements:
- Emphasis will shift toward more quantitative, and less burdensome, reporting.
- Sector-specific reporting becomes voluntary.
- Smaller companies (<1,000 employees) expressly protected from "trickle-down" requests for additional disclosures (going beyond the voluntary SME standards).
- Digital Portal: the Commission will launch a digital portal featuring templates and guidelines on EU and national reporting requirements.
Corporate Sustainability Due Diligence Directive (CS3D)
- Scope: the scope now covers only EU companies with more than 5,000 employees and net annual turnover above €1.5 billion, as well as non-EU companies with an EU turnover exceeding €1.5 billion.
- Risk-Based Approach Over Blanket Mapping: no longer a requirement for comprehensive mapping of entire value chains. Companies may focus their due diligence on operations where risks are most likely to occur and can prioritise direct business partners when impacts are equally severe.
- Climate Transition Plans Dropped: the obligation to adopt climate transition plans compatible with the Paris Agreement is eliminated.
- Civil Liability & Penalties Recalibrated:
- Maximum penalties align with 3% of a company's net worldwide turnover (based on guidance to be released by the Commission).
- Liability is now governed by national law, removing the EU harmonised liability regime (with a review clause on the need for such regime).
- Transposition Delayed: the transposition deadline is now 26 July 2028 and companies must comply with the new rules by July 2029.
What's Next?
The provisional agreement now awaits formal adoption and publication. Companies can expect further guidance from EU institutions once the amendments are adopted. Meanwhile, the Commission reiterated that more reforms – both regulatory and practical, such as simplified European Sustainability Reporting Standards (ESRS) based on EFRAG's technical advice – are on the horizon.
Key Takeaways for Companies
Compliance teams should:
- Monitor the new thresholds and definitions: many group structures will fall out of scope, but multinationals above the new thresholds must begin reviewing their compliance strategies if they have not already done so. Companies should be aware of the review clause concerning a possible extension of the scope for both CSRD and CS3D.
- Review and reassess country-level obligations: national implementation will be critical (and could result in "gold-plating" requirements in certain Member States). We have seen national divergence in the past and this is likely going to continue to be a challenge for compliance teams.
- Prepare for harmonised digital reporting: companies are well advised to review and adapt to new templates and guidance as soon as they become available.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
