On 13 November 2025, the European Parliament (the “Parliament”) voted in a high-stakes plenary session to amend aspects of the Corporate Sustainability Reporting Directive (“CSRD”) and the Corporate Sustainability Due Diligence Directive (“CS3D”), signalling a likely reduction in corporate sustainability reporting and due diligence rules in the EU.
The omnibus simplification of CSRD and CS3D will now enter trilogue negotiations, with European parties aiming to have the rules finalised by end of 2025. For businesses, this development brings much-needed clarity and certainty, particularly for those companies that have paused their sustainability reporting and due diligence strategic planning pending these legislative changes.
Below we summarise the key outcomes of last week’s vote and outline the next steps towards finalising the omnibus simplification package.
Background
The CSRD introduced mandatory sustainability reporting requirements for many companies, requiring them to include extensive sustainability related disclosures in a dedicated section of their annual reports. The CS3D will require in-scope companies to integrate due diligence into their policies and risk management systems and to prevent, mitigate and remediate adverse human rights and environmental impacts. As part of the first “omnibus simplification package”, the European Commission proposed a set of legislative proposals designed to simplify sustainability laws in the EU, including the CSRD and CS3D (see our update here).
On 13 November, the European Parliament voted on the proposals, adopting its preferred policy positions for negotiations with the other EU institutions.
Cross-Party Alliance Drives Scaling Back of Obligations
On 13 October, the Parliament’s influential Legal Affairs (JURI) Committee (“JURI Committee”) set out their position on key proposals to amend the omnibus simplification package (see our update on this development here). In a plenary vote the following week, however, the Parliament failed to agree on the proposed amendments, forcing MEPs into further negotiations. This result was in part due to several social democrats and liberal MEPs voting against the proposals on foot of a perceived ‘watering down’ of sustainability requirements for large companies.
Following further negotiations, the European People’s Party (“EPP”) shifted its position to align with far-right groups in the Parliament, in a bid to “simplify existing regulations and remove unnecessary burdens for European companies”, according to the EPP leader, Manfred Weber.
The Parliament’s latest position, which will form the basis for negotiations with other EU institutions, includes the following significant changes to the omnibus simplification package:
- raising the threshold for in-scope of CSRD so that reporting obligations would only apply to companies that have 1,750 employees and an annual turnover of €450m; and
- amending the CS3D to remove the requirement for in-scope companies to have climate transition plans.
The table below compares the current law with the positions of the European Commission, Council, and Parliament:
Impact and Next Steps
The Parliament’s latest position signals a significant shift in position within the Parliament; the EPP’s alliance with the far-right represents a move towards deregulation of sustainability regulations and a reversal on the long-standing position of preventing far-right parties from forming part of the majority consensus that shapes European policy.
Trilogue negotiations are due to begin on 18 November, where the Parliament, the European Commission and the Council of Europe will negotiate a final compromise position. While it is hoped that the institutions will reach agreement by the end of 2025, a final position may not be agreed until early 2026.
Many businesses will welcome the latest development and the greater certainty it brings for those preparing for the CSRD and CS3D. For companies likely to continue to be in-scope for the regimes, this latest news will help with continuing readiness projects.
Action Points for Businesses:
- Companies currently preparing for CSRD/CS3D compliance: The proposed changes may significantly reduce your reporting and due diligence obligations or take your business out of scope. However, we recommend maintaining the status quo of your readiness projects (noting that some projects are on pause and some availing of extended time periods for compliance) until the final legislative text is confirmed.
- Companies near existing CSRD/CS3D thresholds: Monitor the negotiations closely, as the revised thresholds may remove you from scope entirely.
- Companies well within currently proposed revised scope: We recommend that you maintain your current readiness projects and monitor the expected simplification of the ESRS (see below).
Simplified Reporting Standards to be Published in December
In a related development, the EFRAG has announced that the new simplified European Sustainability Reporting Standards (“ESRS”) are to be published on 4 December.
Companies set to report under the CSRD will have to do so in accordance with the ESRS. The first set of sector-agnostic ESRS were adopted in July 2023 and, as part of the omnibus simplification efforts, the European Commission tasked EFRAG, technical advisor to the Commission, with simplifying the ESRS also. Following a consultation period on exposure drafts of the ESRS that launched in July 2025, EFRAG has now considered the comments provided and has announced that the ‘Draft Simplified’ ESRS will be unveiled at a conference on 4 December 2025. Participants can sign up to attend the conference virtually here.
For further guidance on how these developments affect your business, please contact Susanne McMenamin, Michael Sinnott or your usual Matheson contact.