Trimming the Green Tape: The First EU Simplification Package Entered the Final Lap

Updated: November 20, 2025

Note: The European Parliament finally adopted its position on the EU Sustainability Omnibus and the last stage of negotiations started. This update compares the co-legislators’ positions going into the trilogue and outlines potential final landscape of the EU sustainability reporting and due diligence obligations applicable to EU and non-EU companies.

Key Points

• The European Parliament has now adopted its position on the revisions to the CSRD and CSDDD.
• The mandate empowers Parliament lead to negotiate in the trilogue talks with the Council and Commission and includes an ambition to conclude the negotiations in 2025.
• If it prevails, Parliament’s stance would significantly narrow the scope of reporting and due diligence obligations (albeit not for non-EU parent undertakings), remove climate transition plan requirements and decentralise enforcement.

Following a rejection of a compromise text in plenary on 22 October (see update below), the centre platform in the European Parliament (EP) attempted to salvage a joint position—and ultimately failed. On 13 November, the European Parliament plenary took a series of votes on amendments and ultimately adopted its position on the legislation. It also mandated the rapporteur, Jörgen Warborn from the centre-right European Peoples Party, to negotiate a final version with the member states, represented by the Danish Council Presidency, and the Commission. The co-legislators have an ambition to finalize these final-stage negotiations, the trilogue, before the end of 2025.

In the European Parliament, the 382 to 249 majority did not come from the centre platform, but from the right side of the political spectrum, including the far right. Many social democrats, liberals and greens now argue that this effectively breaks the isolation of the far right in European Union (EU) decision making. The social democrats, a key partner for the centre right in EU politics, will discuss their next steps in early December.

Putting aside the potential political repercussions, the European Parliament position going into the trilogue negotiations pushes for more significant changes to the legislation than those proposed by the Commission and the Council.

We set out at the end of this update a summary of our recommendations for next steps for companies affected.

Proposed Changes at a Glance

Scope Thresholds

For EU entities, only companies with at least 1,750 employees and €450 million in net annual turnover (i.e. revenue) would be in scope of the Corporate Sustainability Reporting Directive’s (CSRD) reporting obligations (meaning over 90% of currently in-scope companies would no longer need to comply with the reporting framework). For non-EU parent entities, only companies with an EU branch or subsidiary with over €450 million in global net annual turnover would be in scope. However, the EP has proposed removing the additional threshold for non-EU parents to generate €450 million revenue in the EU before they are scoped into CSRD reporting requirements.

As for the Corporate Sustainability Due Diligence Directive (CSDDD) obligations for EU and non-EU entities, the modified thresholds would rise to 5,000 employees and turnover of €1.5 billion.

• Climate Transition Plans: In the CSDDD context, Parliament’s position entirely eliminates any obligation to prepare a transition plan outlining how businesses plan to mitigate climate change and comply with the Paris Agreement.
• No EU-wide Civil Liability: Liability for non-compliance would not be harmonized across member states, meaning enforcement mechanisms will remain decentralized. This change is expected to survive subsequent negotiations.
• Due Diligence Obligations: CSDDD adopts a two-step risk-based approach, in which companies would only need to conduct due diligence on suppliers after first considering relevant risk factors (e.g. company-level, geographic and contextual, product and service, and sectoral) to identify “areas where adverse impacts are most likely to occur and to be most severe.” Secondly, based on that scoping exercise, the company should conduct further assessments where impacts are most likely and severe on “the basis of relevant and verifiable information.” Companies may not seek diligence “unless necessary,” and, where a company has fewer than 5,000 employees, “only as a last resort.” In the CSRD context, companies may not seek information from undertakings in their value chain with fewer than 1,750 employees and a €450 million net global turnover.
• Penalty Structure: Parliament removed its earlier suggestion for an EU-wide cap on penalties for non-compliance with the CSDDD, departing from the Council’s approach which sets the maximum at 5% of global turnover.
• Extraterritoriality: Neither the Parliament nor the Council has addressed whether companies must report and conduct due diligence on their activities outside the EU, which is an obligation in the current legislation and the Commission is not proposing to change this in its original proposal. Due to current lobbying efforts in Brussels, this is an issue that is likely to surface during the trilogue negotiations. We expect pushback from left-leaning lawmakers and EU citizens.

The Parliament’s new position seeks to significantly simplify EU sustainability and due diligence reporting obligations for both EU and non-EU companies, limiting the scope of the CSRD and CSDDD and eliminating some key obligations still contained in proposals of the Commission and Council. The co-legislators will need to find compromises to arrive at an outcome that will require final approval by both the EU member states in the Council and by the European Parliament.

Comparing Proposals

^{1 All thresholds (financial and employee) are measured on a two year lookback period. I.e. for 2025 reporting requirements, FY2024 and FY2023 would be reviewed.}

What Companies Should Do Now

Companies should continue preparing for CSRD and CSDDD compliance while monitoring legislative developments. Recommended next steps include:

• Conduct a scoping exercise of any EU companies in your group and determine whether this could trigger any group-wide reporting under the newly proposed thresholds.
• Continue preparing climate transition plans.
• Identify information indicating whether any tier 1 suppliers present a plausible risk.
• Monitor and inform the trilogue negotiations with a view to a positive outcome.

Subscribe to Akin’s Speaking Sustainability blog for ongoing analysis of legal and regulatory developments in the sustainability space, and please reach out to the team for any further information or assistance in scoping exercises.

October 27, 2025

Note: Subsequent to publishing our client alert, the European Parliament voted, on October 22, by a narrow margin against the compromise changes to the EU’s sustainability reporting and due diligence requirements that had been agreed in the lead Committee. The final stage of negotiations with the Council and the Commission will need to be postponed until the European Parliament finalizes its position and votes on the initiative. The vote is currently scheduled for November 13. Below, we explain the reasons for the shift and our expectations for the next steps.

On October 22, the Left, a far-left political grouping within the European Parliament, instigated a vote in the plenary on the compromise position agreed by the lead JURI Committee. Importantly, this motion received support from around 30 Social Democrat (S&D) members of the European Parliament and eventually meant that the compromise and the Parliament’s negotiating mandate were rejected by a narrow margin of 309 in favor, 318 against and 34 abstentions.

Supporters of the compromise, the center-right Christian Democrats (EPP) and the liberals (Renew), argued it would have reduced administrative burdens on smaller companies struggling to comply with complex ESG mandates. However, opponents on the far left and those split from the center-left social democrats (S&D) warned that rolling back disclosure requirements could undermine the EU’s climate goals and deprive investors of essential information to assess environmental and social risks. Pascal Canfin, a senior member of the Renew party, called the outcome a “mistake,” emphasizing that the compromise had been crafted by pro-European parties (i.e., the EPP, S&D and Renew) and cautioning that a more radical proposal – up to and including abolishing the CSDDD – could now gain traction.

Following the rejection and in line with Rule 72(3) of the Parliament’s Rules of Procedure, the draft will be open to amendments again, and the European Parliament will vote on these and the full position at the upcoming plenary session in Brussels on November 13. Negotiations with EU member states and the European Commission would follow, as co-legislators push to reach a final agreement by year-end.

The leading faction, consisting of the Christian Democrats and the EPP, once again faces a dilemma – either to negotiate, and potentially compromise, with the S&D to hold the centrist platform on which the European Parliament has been functioning and which elected the European Commission or to vote this legislation through with support from the far right of the political spectrum. Events since last week’s vote suggest that the former option, adoption on the basis of the centrist platform, is the scenario preferred by key players.

In the meantime, the Commission, as well as the EU member states, who have finalized their common position back in June, are urging the European Parliament to finalize its procedure in order to move closer to providing predictability to businesses.

While some uncertainty remains, we expect that the European Parliament’s position will not depart significantly from what we outlined in our original client alert below, prior to the vote. Current negotiations focus on two key aspects: i) whether a company should be able to be held liable for environmental damage, and ii) whether companies should be obliged to create climate transition plans and act upon them. We also believe that the aspect of extraterritoriality will be discussed in the final stage of the negotiations, the trilogue.

October 16, 2025

The first EU simplification omnibus, on sustainability reporting and due diligence, moves to the final stretch of negotiations with interests and emotions running high. The inter-institutional negotiations, known as the trilogue, are expected to start as soon as next week and are envisaged to conclude in December, allowing the revamped legislation to be finalized and voted on by the co-legislators in January 2026, followed by transposition into the national laws of individual EU member states.

Following months of discussions in the European Parliament (EP) over the proposed amendments to the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), the EP’s Legal Affairs Committee (JURI Committee) approved its position on a series of changes to sustainability reporting and due diligence requirements for companies. This vote is a result of heated disagreements within the center platform, followed by a compromise agreement, avoiding an alternative voting coalition with the far right of the EP’s political spectrum.

The EP’s lead negotiator, MEP Warborn, described the adopted position as one that “cuts costs, strengthens competitiveness, and keeps Europe’s green transition on track.”

This compromise position still significantly narrows the scope of sustainability reporting, but does so less aggressively than the June proposal (which we discussed here). Crucially, it brings the applicability thresholds mostly in line with those proposed by the European Council’s report: 1,000 employees and €450 million net turnover for the CSRD, and 5,000 employees and €1.5 billion net turnover for the CSDDD. Both thresholds are significantly higher than those proposed by the European Commission’s Omnibus package, but align with the position of the Council, the other co-legislator, composed of EU member state governments.