Council agrees mandate on Omnibus CSRD & CSDDD simplification proposal

What’s new

On 23 June 2025, the Council of the European Union agreed its negotiating mandate on the Commission’s proposal for a directive simplifying the directives on corporate sustainability reporting (CSRD) and due diligence (CSDDD). The proposed directive is part of the Commission’s Omnibus I package intended to simplify EU legislation in the field of sustainability.

As we reported at the time, the “Stop-the-clock” directive under Omnibus I–which delays (i) the application of CSRD to companies (other than those already subject to reporting) by 2 years, and (ii) the transposition deadline and application of CSDDD by 1 year–has already been agreed and published in the Official Journal of the European Union (the OJ).

For more information on the Omnibus I and II packages, see our client note here.

How does the Council’s position differ from the Commission’s proposals?

Overall, the Council goes much further than the Commission in rolling back the EU’s sustainability-focused regulations, particularly in terms of the CSDDD and the number of companies which would be in scope.

The main changes which go beyond the Commission’s original proposal are as follows:

1. Corporate Sustainability Reporting Directive (CSRD)

• Scope: the Council supports raising the employee threshold from 250 to 1,000 employees and taking listed SMEs out of scope. However, it has also added a net turnover threshold of over €450 million, further reducing the scope of the directive.
• Review clause: a new provision has been included to add a review clause concerning future reassessment of the CSRD scope to ensure adequate availability of corporate sustainability information.

2. Corporate Sustainability Due Diligence Directive (CSDDD)

• Scope: the CSDDD’s scope was not covered in the Commission’s proposal, but the Council proposes increasing the threshold for EU companies to 5,000 employees and €1.5 billion net turnover, and for non-EU companies to €1.5 billion net turnover. No changes have been made in relation to franchising/licensing companies.

• Risk-based Approach: changing the focus of due diligence from an entity-based approach to a risk-based approach, with a focus on areas where adverse impacts are most likely to occur. Companies would therefore be required to conduct a more general scoping exercise rather than comprehensive mapping, based on “reasonably available information”.

• Transition plans: the Council not only removes the obligation to “put into effect” a transition plan, but also softens the substantive requirements of the transition plan by, for example, only requiring the business model and strategy of the company to “contribute to” (as opposed to being “compatible with”) the transition to a sustainable economy and to the limiting of global warming in line with the Paris Agreement. It also postpones the obligation to adopt transition plans by two years.

• Timing: going beyond the Commission’s proposals and the stop-the-clock directive, which has already been published in the OJ, the Council proposes postponing the transposition and application dates of the CSDDD by an additional year (meaning the new transposition deadline would be 26 July 2028 and first-time application 26 July 2029).

A more detailed overview of the Council’s negotiating mandate and key changes compared to the Commission’s original proposal can be found in the table attached here.

Next Steps

The European Parliament has not yet adopted its negotiating mandate on the proposed directive. Once this has happened, trilogue negotiations will begin as part of the EU’s ordinary legislative procedure.