EU Parliament agrees position on sustainability reporting Omnibus Content Directive
24 November 2025
What you need to know
- To improve EU competitiveness, the EU Omnibus Package proposes substantive changes to the Corporate Sustainability Due Diligence Directive ((EU) 2024/1760) (CS3D), the Corporate Sustainability Reporting Directive 2022/2464 (CSRD) and the EU Taxonomy Regulation 2020/852 (Taxonomy Regulation).
- The EU Parliament is the last legislative body to have agreed its negotiating position on the Omnibus Content Directive. Concessions on CSRD and CS3D thresholds, and CS3D transition plans requirements have been made to right-wing groups in the EU Parliament to secure an agreed position.
- The Content Directive will now be negotiated by the European Parliament, the Council of the EU and the European Commission (the trilogue negotiations) with the aim of adopting the final text by the end of 2025.
- Commission Delegated Regulation (EU) 2025/1416 (known as the 'Quick Fix Regulation') is now in force. It amends legislation setting out the first EU Sustainability Reporting Standards (ESRS Regulation) to postpone certain CSRD disclosure requirements for 'Wave One' companies.
What you need to do
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Companies in-scope of this legislation need to keep up to date with the ongoing negotiations to understand their likely sustainability reporting and due diligence obligations going forward.
Overview
The European Commission's First Omnibus Package included a proposed directive known as the Content Directive that will make substantive changes to the Corporate Sustainability Due Diligence Directive ((EU) 2024/1760) (CS3D), the Corporate Sustainability Reporting Directive ((EU) 2022/2464) (CSRD) and the EU Taxonomy Regulation ((EU) 2020/852) (Taxonomy Regulation) (see EU Commission publishes first Omnibus Package to simplify sustainability regulations).
The Council of the EU adopted its position on the Content Directive in June 2025 (see Where has the EU's Omnibus got to now?).
On 13 November 2025, the EU Parliament adopted its negotiating position on the Content Directive following months of negotiations between the parliamentary parties owing to disagreements on core issues, including the scope, transition plans, and other fundamental aspects, particularly those related to the CS3D. Representatives from various factions succeeded in reaching an agreement aided in part by high-level political pressure. Alongside this agreement on the text, the Committee also voted in favour of entering into inter-institutional negotiations (trilogues) with the Council.
What happens next?
The Content Directive follows the ordinary legislative procedure, which requires the European Parliament, the Council of the EU and the European Commission to reach a shared position, which will then need to be officially adopted by both the European Parliament and the Council.
Negotiations between the European Parliament, the Council and the European Commission began on 18 November 2025, with the aim of adopting the final text by the end of 2025. The Council has published a document comparing the European Commission, Council and European Parliament's proposals for negotiation.
Comparison of the co-legislators' negotiating positions
The table below compares the Commission, EU Council, and the EU Parliament's positions on key issues:
Issue - Scope of CSRD
| Current legislation |
Wave 1 companies – Large undertakings and parent undertakings of a large group that are Public Interest Entities (PIEs) with, in effect, more than 500 employees and that exceed one of: €25m total balance sheet; or €50m net turnover (T/O). Wave 2 companies – Large undertakings exceeding two of: 250 employees; €25m total balance sheet; and €50m net T/O. Wave 3 companies – Listed SMEs that do not exceed two of: 250+ employees; €25m total balance sheet; and €50m net T/O. Certain financial institutions or insurance undertakings that are large undertakings or listed SMEs. Wave 4 – non-EU companies with EU T/O of €150m+ in the last two FYs and with either: (i) an EU subsidiary meeting the large undertaking criteria or that is a listed SME; or (ii) an EU branch with €40m+ net T/O. |
| European Commission proposal |
Aligns the CSRD scope / qualification thresholds with that of CS3D and thereby removes 80% of companies from the scope of CSRD. Amendments to scoping so that obligations apply to large undertakings and parent undertakings of a large group that exceed 1,000 employees; €25m total balance sheet; and/or €50m net T/O. Listed SMEs no longer in-scope. Non-EU companies with EU T/O of €450m+ in last two FYs and with either (i) an EU subsidiary meeting the large undertaking criteria or (ii) an EU branch with €50m+ net T/O. |
| Council of the EU position |
Proposes CSRD applies to entities with 1,000 employees and net turnover of €450 million. Non-EU companies with EU T/O of €450m+ in last two FYs and with either (i) an EU subsidiary meeting the large undertaking criteria or (ii) an EU branch with €50m+ net T/O. Also proposes a review clause concerning a possible extension of the scope. |
| European Parliament position |
Proposes CSRD applies to entities with 1,750 employees and net turnover of over €450 million. Reporting obligations would apply to non-EU parent entities with EU subsidiaries or branches with a net T/O of over €450 million. Exemptions for financial holdings entities. Proposes a 2 year transition period to delay reporting where non-reporting subsidiaries are acquired. |
Issue - Value chain information cap (prevention of "trickle down" of obligations)
| Current legislation | In-scope undertakings must report information about their own operations and about their value chain. Value chain undertakings are not required to provide any information to reporting undertakings. Art 29b(4) provides the ESRS should specify proportionate disclosures relating to value chains and should not specify disclosures that would require in-scope undertakings to request information from SMEs in their value chain that exceed disclosures in the SME disclosure standards. |
| European Commission proposal |
Proposes that in-scope undertakings would be prohibited from requiring information from undertakings with less than 1,000 employees that exceed the information in the Voluntary Reporting Standard for SMEs (VSME guidance). Also, assurance providers to respect the obligation on in-scope entities not to require information of value chain undertakings with less than 1,000 employees beyond the VSME guidance so that any information provided would not be required to be assured. |
| Council of the EU position | Proposes that information from value chain partners with up to 1,000 employees should be restricted to data covered by the VSME guidance.
Right of value chain partners with less than 1,000 employees- to decline provision of information exceeding VSME guidance. |
| European Parliament position |
Proposes that information from value chain should be restricted to data covered by VSME guidance. The obligation on in-scope entities would limit information requests beyond VSME guidance to value-chain partners with over 1,750 employees. Value chain entities should be allowed to choose a a template for reporting sustainability information voluntarily. |
Issue - EU Sustainability Reporting Standards (ESRS)
| Current legislation | Commission Delegated Regulation (EU) 2023/2772 contains the first ESRS and came into force from 1 January 2024 (see First European Sustainability Reporting Standards (ESRS) apply from 1 January 2024). |
| European Commission proposal | Proposes to revise the ESRS without delay by: removing the least important datapoints; prioritising quantitative datapoints over narrative text; and further distinguishing between mandatory and voluntary datapoints. It also proposes to remove the requirement for the Commission to adopt sector-specific ESRS. |
| Council of the EU position |
Broadly in line with Commission's proposals. Proposes to remove the requirement for the Commission to adopt sector-specific ESRS but includes a recital for the EC to consider sector-specific guidance depending on demand from in-scope entities in the sector. Encourages further interoperability with global sustainability reporting standards. |
| European Parliament position |
Broadly in line with Commission's proposals. Proposes development of voluntary sector-specific guidelines (and also to remove the requirement for the Commission to adopt sector-specific ESRS). Proposes revised ESRS should ensure interoperability with global sustainability reporting standards "to the greatest extent possible". |
Issue - CS3D thresholds
| Current legislation | The Directive applies to companies or their ultimate parent where they have more than 1,000 employees and €450m net worldwide T/O. Non-EU companies or their ultimate parent with EU T/O over €450m are also in scope. |
| European Commission proposal | No proposal to change thresholds |
|
Council of the EU |
Proposes CS3D will apply to entities with 5,000 employees and net T/O of over €1.5 billion. Non-EU entities would be in-scope where their net EU T/O exceeds €1.5 billion. |
| European Parliament position |
Proposes CS3D will apply to entities with 5,000 employees and net T/O of €1.5 billion. Non-EU entities would be in-scope where their net EU T/O exceeds €1.5 billion. |
Issue - Date of Application
| Current legislation | CS3D obligations were originally to apply to the largest (first wave) companies from 1 July 2027. |
|
European Commission |
Proposed to defer the application of the CS3D for the first group of companies to 26 July 2028. This proposal took effect as a result of the Stop the Clock Directive (see EU Parliament adopts Stop-the-clock Omnibus Proposal and process to simplify ESRS starts). |
| Council of the EU position | Proposes to defer application of the CS3D for all in-scope companies to 26 July 2029. |
|
European Parliament |
No further changes to application date |
Issue - Scope of Due Diligence (DD)
| Current legislation |
The Directive requires DD of the business partners in an in-scope company's "chain of activities". Downstream activities of business partners that should be subject to DD are limited to distribution, transport and storage and do not apply to customers. The Directive takes a risk-based approach with DD focusing on areas of the chain of activities where adverse impacts are most likely to occur and to be most severe. |
| European Commission proposal | The Commission proposes to restrict DD to Tier 1 (i.e. direct) business partners. DD for business partners with less than 500 employees should not exceed the information required by the voluntary standards (subject to derogations). DD will only be needed for indirect business partners if there is "plausible information" about adverse impacts or where an indirect relationship has been put in place to avoid CS3D DD. |
| Council of the EU position | Proposes to restrict DD to Tier 1 (i.e. direct) business partners. DD will only be needed for indirect business partners if there is "objective and verifiable information" about adverse impacts or the indirect nature of the relationship is designed to avoid CS3D DD. |
| European Parliament position |
Proposes a risk-based approach to identification of impacts and only carry out DD in areas where adverse impacts are most likely to occur and to be most severe. Information cannot be requested from business partners where severe risks are not likely or were not identified. In-scope entities must rely on reasonably available information to conduct the initial scoping and may only seek information from business partners with less than 5,000 employees as a last resort and if it cannot reasonably be obtained by other means. Information requests must be targeted, reasonable and proportionate. The differences in approach between the European Parliament and the Council are likely to result in further negotiations on this issue |
Issue - Transition Plans (TPs)
| Current legislation | In-scope companies must adopt and put into effect a TP with the aim of ensuring, through best efforts, that the company's business model and strategy are compatible with the transition to a sustainable economy, the Paris Agreement 1.5 degrees goal and the EU's climate neutrality goal including intermediate and 2050 targets. |
| European Commission proposal | The obligation to adopt a TP is retained but the language requiring in-scope companies to put a TP into effect is replaced with a reference to the TP containing implementing actions. |
| Council of the EU position |
Proposes entities should adopt a TP and implementing actions. Proposes to replace the requirement for best efforts to ensure the TP is "compatible" with the transition to a sustainable economy with a requirement for reasonable efforts to ensure the TP "contributes to" the transition. References to alignment with the Paris 1.5 degrees goal replaced with a reference to "limiting of global warming in line with the Paris Agreement". |
| European Parliament position |
Going beyond the Commission and Council's proposal, the Parliament proposes deletion of Article 22 climate Transition Plan requirements. This is also likely to be an area for further negotiation. |
Issue - Liability under CS3D and minimum cap for fines
| Current legislation |
Provides for an EU civil liability regime where an in-scope company intentionally or negligently fails to comply with obligations to prevent, mitigate or bring an end to an adverse impact and that non-compliance damages a protected legal interest in relation to the international human rights or environmental rights, prohibitions or obligations listed in the Directive. Member States are required to set pecuniary penalties for breaches of national legislation implementing CS3D. The maximum level of pecuniary penalties must be not less than 5% of the net worldwide T/O of the company. |
| European Commission proposal |
The Directive will be amended to remove the EU civil liability regime so that civil liability is contingent on national law provisions. The requirement for Member States to ensure that their liability rules are of overriding mandatory application in cases where the applicable law is not the national law of the Member States will be removed. Proposal for the Commission to develop guidance to help supervisory authorities in Member States determine the level of penalties (fining guidelines). It is proposed that Member States are no longer required to set pecuniary penalties with a maximum limit that must be not less than 5% of a company's net world turnover. |
| Council of the EU position |
Proposes removal of the EU civil liability regime so that civil liability is contingent on national law provisions. Aligns with Commission's proposal on fining guidance but proposes the maximum cap on pecuniary penalties is 5% of net world turnover. |
| European Parliament position |
Proposes removal of the EU civil liability regime so that civil liability is contingent on national law provisions. Also proposes to remove the requirement for Member States to set pecuniary penalties up to 5% of a company's net worldwide turnover, leaving Member States to determine the level of fines. |
Quick Fix Regulation postpones certain CSRD reporting requirements for Wave One companies
Commission Delegated Regulation (EU) 2025/1416, known as the Quick Fix Regulation, was published in the Official Journal of the EU and is now in force. It amends Delegated Regulation (EU) 2023/2772 (ESRS Regulation), to postpone certain disclosure requirements for the largest companies in scope of the CSRD (Wave One companies), who published their first CSRD reports in 2025 and who were not covered by the Stop the Clock Directive.
The Quick Fix Regulation, which applies retrospectively to financial years beginning on or after 1 January 2025, will:
- Postpone until FY2027 requirements for Wave One companies to report on the anticipated financial effects of certain sustainability-related risks.
- Extend until FY2027 the temporary exemptions in Appendix C to the ESRS Regulation for Wave One companies with up to 750 employees.
- Allow Wave One companies with over 750 employees who could not previously take advantage of the 'phase-in provisions' regarding ESRS E4 (biodiversity and ecosystems), ESRS S2 (workers in the value chain), ESRS S3 (affected communities) and ESRS S4 (consumers and end-users) to benefit from them until FY2027.
The Quick Fix Regulation is a pragmatic step which seeks to deal with the anomalous situation that would have required Wave One companies to increase their CSRD disclosures for FYs 2025 and 2026 even though they may no longer face reporting requirements once the Content Directive is adopted.
What is happening regarding the ESRS?
Following the European Commission's February 2025 Omnibus proposal, the European Financial Reporting Advisory Group (EFRAG) conducted a consultation on a simplified set of ESRS. The consultation concluded on 29 September, and EFRAG is currently assessing the feedback received.
EFRAG is expected to provide its technical advice on the simplification of the ESRS by the end of November. While the core principle of reporting requirements – double materiality – is expected to remain unchanged; it is anticipated that new flexibilities and reliefs will be introduced, particularly concerning information that would require undue cost or effort to obtain. Further enhanced interoperability with global reporting standards is also very likely. EFRAG has also indicated its intention to eliminate overlaps between general disclosures and topical standards.
Once EFRAG has submitted its advice, the European Commission will review it and shall adopt a new set of ESRS through a delegated act no later than six months after the entry into force of the Content Directive.
Conclusion
There is likely to be further fluctuations in the positions on the Content Directive as the Council and the European Parliament (and factions within each body) seek to get the best deal they can.
The timeframes for the trialogue are tight given that the Content Directive only postponed the application of the CSRD reporting requirements for Wave 2 and 3 companies by 2 years (to 2028 and 2029 respectively) and the transposition deadline of CS3D by a year (to 26 July 2027). The Commission also needs to adopt the delegated act containing the revised ESRS with sufficient time for companies to familiarise themselves with the revised requirements.
On paper, trilogue negotiations should proceed relatively swiftly, as the positions of the European Parliament and the Council are largely aligned. However, it is important not to underestimate the pressure exerted on Brussels by certain political groups within the EU and by third countries, such as the US, which consider EU rules on the due diligence and sustainability reporting as unfair barriers to trade. So far the European Commission has emphasised its regulatory autonomy; nevertheless, in the Joint Statement signed by the EU and the US in August 2025, the EU committed to making efforts to ensure that the CSRD and CS3D "do not pose undue restrictions on transatlantic trade". Furthermore, in some press conferences, the European Commission has indicated its openness to working with the US on "adapting the implementation" of these laws.
For more information
- EU Parliament adopts Stop-the-clock Omnibus Proposal and process to simplify ESRS starts
- EU Commission publishes first Omnibus Package to simplify sustainability regulations
- EU adopts Corporate Sustainability Due Diligence Directive (CS3D)
- First European Sustainability Reporting Standards (ESRS) apply from 1 January 2024
