On Thursday the European Parliament (EP) voted through the so-called “Omnibus Simplification Package,” which aims to reduce the sustainability due diligence and reporting obligations of EU and non-EU companies.

The vote was passed with 382 votes in favor, 249 against, and 13 abstentions, due primarily to an alliance of center-right and far-right groups, signaling a broader rightward shift in EU climate and regulatory policy. That being said, an estimated 12-13% of Social Democrats also supported the revisions.

Speaking on the vote, EPP Rapporteur Jörgen Warborn says, “Europe has a huge growth problem. We are falling behind more or less all of the big economies throughout the world…We have been too bureaucratic, we need to realize it and we need to fix this for businesses in order to come back to growth.”

Warborn also claims that the changes will save companies an estimated 5 billion euros per year from reduced costs related to obligations.

The vote came after months of pressure by the United States and other third countries which argue that the existing rules are too bureaucratic and impediments to trade and competition. During a press conference on the matter, Warborn defended the EU, however, saying that the decision considered concerns of third countries, but that Omnibus simplification is first and foremost about EU competitiveness.

The further dilution of sustainability due diligence and reporting standards is viewed as a loss by staunch supporters of the EU’s flagship Green Deal and transparency architecture, which was previously a key pillar of EC President Ursula von der Leyen’s EPP party. The simplification package has also raised concerns about the availability of comparable data, necessary for banks, and also whether violators of Omnibus-related laws will be punished adequately.

On the point of punishment, particularly in relation to victims’ compensation and civil liberties, Warborn says that the matter is no longer an EU-wide issue, but rather the responsibility of individual Member States to determine what is adequate punishment, adding that it is time for Europe to approach sustainability in European companies with a “carrot, rather than a stick.”

What was decided

The EP voted to limit the Corporate Sustainability Due Diligence Directive (CSDDD) and scrap the obligation for companies to adopt climate transition plans.

With the new proposal, only companies with at least 5,000 employees and €1.5 billion in net worldwide turnover will now have to comply with the CSDDD.

Voted into law in July 2024, CSDDD obligations  aim to “foster sustainable and responsible corporate behavior in companies’ operations and across their global value chains,” and initially applied to all EU companies with more than 5,000 employees and €1.5 billion net worldwide turnover from July 2027 (tier 1) and 3,000 employees and €900 million turnover from 2028 (tier 2). Tier 2 obligations have been removed in the proposal and the application of CSDDD to Tier 1 companies has been shifted to 2028.

The threshold for non-EU companies has been changed from over €450 million net turnover generated in the EU to greater than €1.5 billion net turnover generated in the EU.

The change means that well over half of the companies originally in scope (around 6,000 EU companies plus about 900 non-EU companies), will no longer be captured by the obligation, relieving mid-sized groups and listed companies from the obligation, according to analysts.

In parallel to the position on CSDDD, the EP adopted its negotiating mandate on the Corporate Sustainability Reporting Directive (CSRD) to capture companies with more than 1,750 employees and a net turnover of at least €450 million- a significantly smaller scope than originally planned.

Simultaneously, MEPs backed proposals to streamline the European Sustainability Reporting Standards (ESRS), including a reduction in the number of mandatory data points and limits on large companies’ ability to demand extensive ESG disclosures from smaller counterparties. This is expected to reduce the indirect burden of sustainability reporting on small companies as well, although this could expose larger companies captured by CSDDD to more supply chain risk because they may receive less information from upstream partners.

What happens next? Ratification path and timeline

This vote does not yet change the law on the ground and the process is far from over. However, it does three things: sets the Parliament’s official position on how to amend CSDDD and CSRD through the Omnibus package; opens the way for trilogue negotiations with the European Parliament, Council of the EU (Member States) and the European Commission; puts political pressure on the Council to accept higher thresholds and lighter reporting.

The Omnibus amendments will move into trilogue on Tuesday. Negotiations are under pressure as the file is tied to what is known as a “stop the clock” procedure, and unless the EP and Council reach agreement on the amendments in time, the original CSDDD timelines will automatically re-activate.

The base of the CSDDD text is already law and, under the original directive plus amendment, Member States must transpose CSDDD by July 2027, with company obligations phasing in from 2027–2030, depending on their size.

On account of the high priority placed on Omnibus, but also the complications around arriving at an agreement in trilogue due to different positions of the European Commission and Council on various points of the simplification package, observers expect final agreement only in late 2025 or even 2026.

What does this mean for Greek companies?

Under the newly proposed simplification rules, if passed, very few Greek companies will be captured by the CSDDD obligations. Some key examples of the few Greek companies with over 5,000 employees and €1.5 billion of turnover include Public Power Corporation (PPC), Hellenic Telecommunications Organization (OTE), Sklavenitis Group (known for their supermarket chain in Greece), and banks that may fit the criteria, such as the National Bank of Greece (NBG), Alpha Bank, Eurobank Group and Piraeus Bank.

By contrast, several large Greek energy and industrial groups with very high net worldwide turnover but fewer than 5,000 direct employees, such as HELLENiQ Energy, Motor Oil Hellas and Metlen (Mytilineos), could drop out of scope under the Parliament’s preferred thresholds, even though their environmental footprint is significant.

Nevertheless, even if the formal CSDDD obligations are eased, Greek SMEs and mid-caps are still expected to face indirect pressure from large EU customers and banks, which must continue to assess human-rights and environmental risks across their supply chains.