European Parliament votes to adopt Omnibus proposal amending CSRD and CS3D

EU Corporate Sustainability Reporting Directive (CSRD)

• Scope: The adopted proposal will increase the application thresholds of CSRD to companies with over 1,000 employees and €450 million net turnover. This is a significant increase, compared to the current thresholds which are set at €50 million in net turnover, €25 million on the balance sheet and 250 employees. For context, the original Omnibus proposal was estimated to exclude 80% of companies from the scope of CSRD.
• For non-EU companies with subsidiaries or branches in the EU, the threshold applicable to such subsidiary or branch be €200 million (up from the current €40 million), and the non-EU company should also have an overall turnover in the EU of € 450 million (which is currently set at € 150 million).
• The amendments would also exempt parent financial holding companies which act only as holding companies, without being involved in the management of other undertakings and which do not have any EU subsidiaries with an operating business.
• Where a company has recently acquired a previously out-of-scope subsidiary it will have a 24-month transition period before being required to integrate such subsidiary’s information into its consolidated sustainability report.
• Limit on seeking information: Companies will be prohibited from seeking to obtain information from undertakings in their value chain which have less than 1,000 employees, except for the information to be specified in the sustainability standards for voluntary use. The Commission will be required to adopt these standards by delegated act within four months after the Omnibus Directive enters into force.
• However, this prohibition will not apply to information requests made for purposes other than CSRD reporting, including other EU laws requiring due diligence and the reporting undertaking’s risk management. In this way, the prohibition will not limit companies’ ability to continue their supply chain due diligence for the purposes of, for example, the EU Deforestation Regulation (EUDR) or the EU Forced Labour Regulation (EUFLR).
• Inability to obtain information: The relevant sustainability reporting standards (the European Sustainability Reporting Standards or ESRS) should take account of the difficulties that undertakings may encounter in gathering information from actors throughout their value chain, especially those that are not subject to CSRD, or based in emerging markets and economies.

EU Corporate Sustainability Due Diligence Directive (CS3D)

• Scope: The amendments adopted would increase the thresholds that determine which companies are caught by CS3D to:
  • EU companies with more than 5,000 employees and a net worldwide turnover of more than € 1.5 billion; and
  • Non-EU companies with more than €1.5 billion in net turnover in the EU; and
  • Companies with: (i) EU franchising or licensing agreements for annual royalties that exceed €75 million; and (ii) an annual net turnover excess of €275 million worldwide (for EU companies) or in the EU (for non-EU companies), or the ultimate parent companies of such a corporate group.
• It is worth noting that the increases to the CSRD thresholds proposed by the original Omnibus were aimed at aligning them with the existing CS3D thresholds, so that the same companies would be caught by both Directives. However, these new proposals would move away from alignment by not only significantly raising the CSRD thresholds (as noted above), but also raising the CS3D thresholds even further.
• Risk-based assessment: CS3D requires companies to identify and assess actual or potential adverse impacts. The proposed amendment would require this to consist of a risk-based approach taking account of risk factors such as those relating to geographical context, sector, product or service, and whether the business partner is covered by CS3D. 
• For this risk-based assessment, the amendment describes a two-step process:
  • Step one: A scoping exercise to identify general areas across the company’s own operations, subsidiaries and, where related to their chains of activities, those of their business partners where, based on reasonably available information, adverse impacts are most likely to occur and to be most severe. 
  • It states that “reasonably available information” will “as a general rule preclude requesting information from business partners” although companies will have “flexibility in judging what information is reasonably available to them”.
  • Step two: Based on the results of the above scoping the company should carry out an in-depth assessment in the areas where the most severe and likely adverse impacts have been identified. 
  • For this purpose, companies should not seek to obtain information from business partners “unless this is necessary”. Where a business partner has less than 5,000 employees, the company shall only seek such information only where information “cannot reasonably be obtained by other means”.
  • Where such information can be obtained from more than one business partner companies should, where reasonable, prioritise seeking it directly from the partner(s) “where the adverse impacts are most likely to occur”.
• Prioritisation: CS3D provides for the prioritisation of those impacts that are most severe and most likely, which aligns with the UN Guiding Principles on Business and Human Rights (UNGPs) on which the CS3D concept of due diligence is based. The adopted amendments would ensure that companies which are prioritising their most severe and likely adverse impacts under this provision are not subject to regulatory penalties for failing to address any less significant adverse impacts. 
• Suspension of business relationships: Where a business partner is associated with adverse impacts, the company can, as a “last resort” and “until the impact is addressed”, suspend the business relationship. Where the business partner’s prevention or corrective action plan is reasonably expected to succeed, the “mere fact of continuing to engage with the business partner” should not expose the companies to regulatory penalties or civil liability.
• Corporate groups: Parent companies may carry out the due diligence obligations on behalf of their in-scope subsidiaries, although such subsidiaries would still be subject to regulatory oversight and potential civil liability.
• Removal of climate transition plans: The European Parliament adopted an amendment to remove Article 22 entirely, which relates to the adoption of climate transition plans. The original Omnibus proposal retained the provision but removed the requirement to put an adopted transition plan into effect.
• Harmonisation: In order to achieve harmonisation across the EU, the proposed amendments would prevent Member States from adopting laws that exceed the relevant due diligence obligations (so-called “gold-plating”).

Next steps

Following the adoption of the amended proposal by the European Parliament on 16 December 2025, the Directive will require EU Council approval and publication in the Official Journal of the European Union before any amendments to the existing CSRD and CS3D are to take effect.

Given that CSRD and CS3D are already enacted, the legislators have committed to accelerate the usual legislative timeframes for the Omnibus process. We will keep monitoring the developments.