What’s being sold as simplification could mean the end of meaningful sustainability transparency. Recent developments around the CSRD reform raise serious concerns.
The Corporate Sustainability Reporting Directive (CSRD) was supposed to be a milestone—an instrument requiring companies across Europe to report transparently on sustainability. But what happened in the European Parliament in October 2025 is alarming: The so-called Omnibus initiative threatens to water down the CSRD so significantly that little remains of its original ambition.
October 8, 2025: How the EPP weakened the CSRD
On the evening of October 8th, a surprising turn of events unfolded in the EU Parliament. After massive pressure from the conservative EPP group, which threatened to form an alliance with right-wing forces, the Social Democrats (S&D) backed down. The result: far-reaching exemptions and dilutions that will fundamentally change sustainability reporting in Europe.
The S&D’s lead negotiator, Lara Wolters, subsequently resigned from her position in protest—a clear signal of just how controversial these compromises are.
The concrete changes: Who still has to report?
Raising the thresholds
Under the new plans, companies with fewer than 1,000 employees would be generally exempt from CSRD reporting obligations. For comparison: Originally, all “large” companies in accounting terms were supposed to report—those meeting at least two of three criteria:
- More than 250 employees
- More than €20 million balance sheet total
- More than €40 million net turnover
This increase to 1,000 employees means: Thousands of medium-sized companies that previously fell within scope are now excluded.
Germany’s Federal Ministry of Justice (BMJV) estimates in its draft implementation law that after full implementation of the Omnibus changes, only up to 3,900 companies in Germany will be required to report. A drastic reduction.
The CSDDD is also being gutted
Parallel to the CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD)—the EU supply chain directive—is being massively weakened. New thresholds of 5,000 employees and €1.5 billion turnover mean due diligence obligations in supply chains will only apply to a handful of large corporations. A common civil liability regime has been completely scrapped.
Why is this problematic?
- 1. A patchwork instead of comprehensive transparency – and SMEs pay the price anyway
When large parts of the economy are exempted from reporting requirements, we get a patchwork of transparency. While a small group of large companies must report comprehensively, much of the economy remains in the dark.
But here’s the paradox: Even non-reporting medium-sized companies will be indirectly affected. Large reporting companies must provide information about their value chain—and will demand this data from their suppliers. The result:
- SMEs must provide sustainability data without having clear regulatory guidelines themselves
- Different data requests emerge from various large customers, instead of a unified standard
- Inefficiency for everyone: Large companies get inconsistent data, small ones struggle with different formats and requirements
- The intended relief becomes bureaucratic chaos
A uniform reporting obligation for more companies would actually have created clarity and efficiency – for both large reporting companies and their suppliers.
- 2. A two-tier system for sustainability
A divide emerges: A small circle of large companies that must report comprehensively – and a large remainder for whom sustainability remains largely optional. This undermines the goal of a comprehensive transformation toward sustainable business.
Sustainability becomes a privilege or burden of the large, rather than a common standard. Yet we need precisely a broad movement where companies of all sizes contribute – with clear but proportionate requirements.
- 3. EU Green Deal credibility at stake
The EU’s Green Deal was announced as an ambitious program. However, the current dilutions send the opposite signal: Economic special interests appear more important than consistent climate protection and social responsibility.
The political context: Economic interests before climate protection?
What’s remarkable isn’t just the outcome, but how it came about. The EPP group put massive pressure on the Social Democrats, threatening to vote together with right-wing and far-right factions if necessary. Under this pressure, the Social Democrats gave in—their lead negotiator Lara Wolters subsequently resigned.
This raises fundamental questions: If even on sustainability reporting- a comparatively technical issue – such tactics are used, what does this mean for future climate policy legislation? The signal is problematic: Whoever threatens loudest and builds the greatest political pressure ultimately gets exemptions and dilutions.
What happens next?
The next steps are:
- October 13th: Vote in the Legal Affairs Committee (JURI)
- Following week: Vote in the Parliament plenary
- November/December: Trilogue negotiations between Commission, Council, and Parliament to finalize the legal text
Not everything is decided yet. For example, it remains open whether the turnover threshold will be €450 million or €50 million—a huge difference.
What does this mean in practice?
For affected companies
If you’re a company just above or below the new thresholds, there’s currently uncertainty. Our advice:
- Monitor developments closely – the final requirements may still change
- Prepare anyway: Even if you won’t be reporting-obligated, your customers (large reporting companies) may require sustainability information from you
- Use voluntary standards: Certifications like CSE (Certified Sustainable Economics) can help you credibly document your sustainability performance—regardless of legal obligations
A devastating signal to the younger generation
These dilutions send a problematic signal – especially to young people who are demanding more climate action and corporate responsibility, not less.
The younger generation expects transparency from companies about their sustainability performance. They want to know which employers and brands they can work for and buy from with a clear conscience. Instead of meeting this legitimate expectation, reporting requirements are being hollowed out.
The message is devastating: When economic pressure is great enough, climate goals get pushed aside. Exactly the opposite of what we need to win the next generation over to ambitious climate protection.
Our conclusion
The Omnibus changes may create less bureaucracy in the short term. But in the long run, we pay a high price: Less transparency, weaker standards, and a missed opportunity to establish sustainability as a real competitive factor.
What’s presented as technical simplification is actually a step backward. The EU risks squandering its leadership role in sustainable corporate governance—at precisely a time when we need more ambition, not less.
The question isn’t whether companies should be obligated to sustainability. The question is whether we can afford not to obligate them.
Are you already taking responsibility and want to communicate your sustainable corporate management in a credible way?
Contact us – we will be happy to advise you.
FAQ: Frequently asked questions about the CSRD Omnibus
What is the CSRD Omnibus and what changes will it bring?
The CSRD Omnibus is an EU initiative to “simplify” sustainability reporting. The most important change: the threshold for companies subject to reporting requirements is rising from 250 to 1,000 employees. This means that thousands of medium-sized companies will be exempt from direct reporting requirements.
When do the new CSRD regulations come into effect?
The exact timetable has not yet been finalized. Following the vote in the Legal Affairs Committee (October 13) and in plenary (next week), trilogue negotiations between the EU Commission, Council, and Parliament will begin in November/December 2025. Only then will the final text of the legislation be adopted.
Does the CSRD Omnibus also apply to medium-sized companies with fewer than 1,000 employees?
Yes, indirectly. Even though smaller companies are no longer directly required to report, large companies that are required to report will demand sustainability data from their suppliers. This means that medium-sized companies will still have to provide data, but without uniform standards, which could lead to bureaucratic proliferation.
How many companies are still subject to reporting requirements under the CSRD Omnibus?
According to estimates by the Federal Ministry of Justice, only up to 3,900 companies in Germany will still be required to report on sustainability — a drastic reduction compared to the original plans.
Will the CSDDD (Supply Chain Directive) also be watered down?
Yes, parallel to the CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD) is also being massively watered down. The new thresholds of 5,000 employees and €1.5 billion in revenue mean that due diligence obligations will only apply to a few large corporations.
Should my company still prepare for sustainability reporting?
Yes, absolutely. Even if you are not formally required to report, your major customers (who are required to report) may request sustainability information from you. In addition, voluntary certifications such as CSE (Certified Sustainable Economics) can give you a competitive advantage.
Why is the weakening of the CSRD problematic?
The weakening creates a patchwork of transparency, in which medium-sized suppliers are still indirectly affected—only without clear standards. It also creates a two-tier society in which sustainability becomes a privilege or a burden for the big players, rather than a common standard.
What can I do as a company now?
Keep a close eye on developments, prepare for potential data requests, and consider voluntary sustainability certifications. These can help you credibly document your sustainability performance — regardless of legal obligations.
