Negotiators for the Council of the EU and the European Parliament reached a provisional political agreement in early December 2025 on the first omnibus simplification package, known as Omnibus I. The deal substantially narrows the scope of two flagship sustainability laws: the Corporate Sustainability Reporting Directive, or CSRD, and the Corporate Sustainability Due Diligence Directive, or CSDDD.
Under the agreement, as summarised by law firms including Linklaters and A&O Shearman, the CSRD will apply to companies with more than 1,000 employees and net annual turnover above €450 million. Listed small and medium-sized enterprises are removed from scope. The CSDDD will apply to companies with more than 5,000 employees and net turnover above €1.5 billion.
What the CSRD requires
The CSRD, adopted in 2022, requires companies in scope to report detailed information on sustainability matters according to European Sustainability Reporting Standards. For climate, that includes greenhouse gas emissions across Scopes 1, 2 and 3, transition plans, climate-related risks and opportunities, and energy consumption. The first companies began reporting for the 2024 financial year.
The original scope covered around 50,000 companies, including large unlisted companies and listed SMEs. The Commission's February 2025 omnibus proposal aimed to reduce that number by about 80%. The provisional agreement goes further on thresholds than some earlier positions, focusing the obligations on the largest companies.
What the CSDDD requires
The CSDDD requires companies to identify, prevent and address adverse human rights and environmental impacts in their operations and value chains. In its original form, it also required companies to adopt and put into effect a climate transition plan compatible with limiting warming to 1.5°C. The omnibus negotiations have softened aspects of the transition plan requirement and the civil liability provisions, and the higher thresholds reduce the number of companies covered.
Why it matters for energy
Energy companies, utilities and large energy users are among those that remain in scope under the new thresholds. Large oil and gas companies, power producers and network operators with operations in the EU exceed the employee and turnover thresholds. Their reporting on emissions, transition plans and climate risks will continue, though possibly with simplified standards.
The scope change matters more for the energy supply chain. Many mid-sized suppliers, contractors and industrial customers will now fall outside the CSRD. That affects the availability of standardised emissions data across value chains, which large companies rely on to calculate Scope 3 emissions.
For data centre operators, many of which are large multinationals, CSRD reporting will continue for the biggest players. The EU also has separate rules requiring data centres above a size threshold to report energy and water use under the Energy Efficiency Directive, which are not affected by the omnibus.
The international dimension
The CSRD and CSDDD also apply to non-EU companies with significant EU turnover. The higher thresholds reduce the number of US, UK, Chinese and other foreign companies affected. US officials and companies had lobbied for narrower scope, and the CSDDD had been raised in trade discussions. Qatar, a major LNG supplier to Europe, had also raised concerns about the due diligence directive's effect on its energy exports.
Other jurisdictions are moving in different directions. California's climate disclosure laws require large companies doing business in the state to report emissions and climate risks, with first reports due from 2026, although one of the laws has been paused by a federal appeals court pending litigation. The US Securities and Exchange Commission has abandoned its defence of its own climate disclosure rule. The International Sustainability Standards Board's standards are being adopted or considered in many countries, including the UK, Japan, Australia and several emerging economies.
Investor implications
For investors, narrower scope means less standardised data on smaller companies, though large companies, which account for most emissions, remain covered. Banks and asset managers subject to the EU's Sustainable Finance Disclosure Regulation and the EU taxonomy rely on CSRD data from investee companies, and changes in the availability of that data will affect their own reporting.
The changes have been welcomed by business groups as reducing costs and administrative burden, and criticised by some investor groups and civil society organisations as weakening transparency. Both sides agree that the reporting standards themselves will also be simplified, through revisions to the European Sustainability Reporting Standards under way at the European Financial Reporting Advisory Group.
Effects on transition plans
Transition plans have been one of the most debated parts of both directives. Under the CSRD, companies report whether they have a transition plan and describe it. Under the original CSDDD, companies were required to adopt one. For energy companies, a transition plan typically sets out how capital spending, asset portfolios and emissions are expected to change over time. Investors use these plans to compare companies' exposure to policy and market shifts.
With the obligations softened and focused on fewer companies, the number of standardised transition plans published in the EU will be lower than first expected. Large utilities and oil and gas majors have already published such plans voluntarily or under national rules, so the immediate effect on the biggest energy companies is limited. The larger change is for mid-sized industrial firms, including energy-intensive manufacturers, which will no longer face a mandatory framework.
Assurance and audit
The CSRD also introduced mandatory limited assurance of sustainability information by auditors, with a possible move to reasonable assurance later. The omnibus discussions have pushed back on the move to reasonable assurance. For energy companies that remain in scope, auditors will continue to review reported emissions and energy data, which raises the cost of reporting but also its reliability for investors and lenders.
What happens next
The provisional agreement must be formally adopted by the Parliament and the Council. Member states will then need to transpose the changes into national law. The Commission is expected to adopt simplified reporting standards in 2026. Companies that had prepared to report for 2025 or 2026 under the original timeline are now reassessing whether they remain in scope.
What to watch
Key items include formal adoption of the omnibus, publication of the simplified reporting standards, and how companies that fall out of scope choose to continue voluntary reporting. For energy markets, the main question is whether the quality and coverage of emissions data across value chains are maintained as the scope narrows.