After months of negotiations, on 9 December 2025, the European Parliament and the Council reached a provisional agreement on the first legislative simplification package proposed by the European Commission, known as Omnibus I. Although presented from the outset as a technical adjustment aimed at reducing administrative burdens, the agreement represents one of the most significant revisions of the European regulatory framework on corporate sustainability since the adoption of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
A political mandate to simplify
The legislative package emerged in a broader political context marked by increasing pressure from Member States and business sectors to reduce the regulatory burden on European companies. The central argument advanced was that regulatory simplification would be necessary to strengthen the European Union’s competitiveness in an unstable global economic environment. In response to these demands, the European Commission presented Omnibus I on 26 February 2025, stating that its objective was to simplify EU sustainability legislation.
In practice, the Commission’s proposals focused primarily on the CSRD and the CSDDD. The declared intention was to simplify obligations, avoid regulatory overlap and reduce the indirect impact of sustainability requirements on small and medium-sized enterprises. For supporters of the initiative, the package fulfilled political commitments to create a more predictable and favourable regulatory environment for economic activity within the European Union.
As the political debate progressed, however, it became increasingly clear that Omnibus I went beyond a mere administrative reorganisation. The proposed changes began to raise deeper questions regarding the scope and coherence of the commitments assumed by the European Union in the field of responsible business conduct.
The weakening of corporate standards
Despite continuing to be presented as a targeted measure, a significant part of of legal scholarship and civil society has pointed out that the agreement results in a substantial weakening of the EU’s corporate sustainability policy. For many observers, the discourse on reducing bureaucracy has worked as a pretext to dilute the original requirements, in a process characterised by limited transparency.
Criticism has not been limited to the substance of the reforms, but has also focused on the way in which the legislative process was conducted. In its analysis of the Omnibus process, the European Ombudsman identified clear tensions between the alleged urgency of the proposals and compliance with basic requirements of legislative quality, transparency and justification. This suggests that the dilution of the CSDDD was not merely a substantive political choice, but also the result of a deliberate cutting of procedural safeguards.
These tensions become even more evident when looking directly at the CSDDD. The directive was conceived to transform voluntary international standards on human rights and environmental due diligence into legally binding obligations at EU level. Following the negotiations, however, it has emerged in a substantially diluted and weakened version.
One of the most controversial points concerns the change in its scope of application. Under the new criteria, only companies with more than 5,000 employees and net turnover exceeding €1.5 billion fall within the scope of the CSDDD. This change drastically reduces the number of companies covered, limiting it to just over one thousand across the Union. While some policymakers defend this choice as a way to ensure that only companies with greater compliance capacity are included, critics warn that it compromises the directive’s transformative potential and significantly reduces its practical reach.
From simplification to substantive change
Beyond the restriction of scope, Omnibus I removes or relaxes central elements of the original design. A clear example is the removal of the obligation for companies to adopt climate transition plans, previously set out in Article 22. This change raises doubts as to the coherence of EU law with the climate commitments under the Paris Agreement, as well as with the Union’s own climate objectives.
This weakening of the legal regime is particularly problematic when contrasted with the expectations expressed by the business sector itself. Recent studies show that many companies have called for greater legal certainty and stronger EU-level harmonisation precisely to avoid regulatory fragmentation. Both the EU Study on Due Diligence Requirements through the Supply Chains, commissioned by the European Commission, and a policy brief by the Danish Institute for Human Rights indicate that fragmented civil liability regimes undermine legal predictability and weaken the effectiveness of due diligence obligations. From this perspective, the outcome of Omnibus I fails to address the competitiveness concerns frequently invoked and, in several respects, moves in the opposite direction to the preferences articulated by economic actors.
Another central issue concerns the elimination of a harmonised EU civil liability regime. By leaving this matter entirely in the hands of Member States, the agreement consolidates a landscape of 27 distinct regimes. This is likely to generate legal uncertainty both for companies subject to due diligence obligations and for victims seeking redress, running counter to one of the core objectives of the original proposal: ensuring a minimum and uniform level of access to justice across the European Union.
The introduction of a non-regression clause is also noteworthy. In theory, such a clause should prevent backsliding in existing levels of protection. In practice, however, its interpretation must be assessed in light of Article 52(1) of the Charter of Fundamental Rights of the European Union. According to the case law of the Court of Justice, any deliberate reduction of a previously established level of protection constitutes a limitation of fundamental rights and must therefore be subject to strict review, requiring legality, respect for the essence of the rights concerned, necessity and proportionality, as well as the demonstration of overriding reasons of public interest and the adoption of appropriate transitional measures.
By reinforcing rights enshrined in the Charter — such as environmental protection, the right to information, consumer protection and social rights — through the CSRD and the CSDDD, the EU legislator created a normative framework around which workers, affected communities, civil society organisations and investors have structured their practices and expectations. Any subsequent attempt to weaken this framework is therefore subject to clear legal limits and to scrutiny by the Court of Justice.
Far from automatically ensuring the maintenance of a high and common level of protection, the non-regression clause, as formulated in Omnibus I, may instead allow the preservation — or even the legitimisation — of less demanding national standards. Rather than functioning as a safeguard against regulatory backsliding, it risks deepening existing regulatory inequalities and weakening the logic of convergence that underpinned the original version of the CSDDD.
Member States still hold the pen
Despite the weakening of the regime at EU level, Member States retain significant room for manoeuvre when transposing the revised directive into national law. They remain free to adopt more ambitious standards, whether by expanding the scope of application, strengthening civil liability rules or imposing more stringent climate-related requirements. Some governments have already signalled such intentions, which may increase regulatory fragmentation but could also preserve, at least in part, the original spirit of the CSDDD.
In sum, the agreement on Omnibus I marks a turning point in European corporate sustainability regulation. Although presented as a technical exercise in simplification, its impact goes well beyond administrative “rationalisation” and directly affects the content and ambition of the obligations established in recent years.