Anticipated simplifications to CS3D and CSRD – where does the Omnibus saga end? 

Insights|October 6, 2025

The EU Council has internally agreed on the position to take in relation to the substantive parts of the Omnibus Package. The EU Council’s negotiating mandate indicates that the proposal is likely to undergo further changes before it may be adopted as a directive.

Background

When the Omnibus Package initially was presented by the European Commission on 26 February 2025, it drew significant attention for the amendments to EU sustainability regulations that it proposed to introduce. Various simplifications were proposed to three key pieces of EU sustainability legislation, namely the Corporate Sustainability Due Diligence Directive (“CS3D“), the Corporate Sustainability Reporting Directive (“CSRD“) and the EU Taxonomy Regulation (Taxonomy Regulation). For further background, please see our previous publication Navigating a changing regulatory landscape on corporate sustainability – what you need to know about EU’s sustainability due diligence requirements after the Omnibus Proposal.  

The Omnibus Package consists of two separate but interconnected proposals. One of the proposals, referred to as the “Stop-the-Clock” Proposal, has been adopted as a Directive. It had the effect of postponing the implementation timelines for both the CSRD and the CS3D. The other part of the Omnibus is a proposal to introduce substantive changes to CSRD and CS3D (the “Content” Proposal). The “Content” Proposal is still in draft form and continues to be heavily debated by the EU institutions.  

First proposal: The “Stop-the-Clock” Directive

The “Stop-the-Clock” Directive entered into force on 17 April 2025 and is currently being implemented into national law across Member States. The “Stop-the-Clock” Directive postpones:  

  1. by two years the application of the CSRD requirements for large companies that unlike “first wave companies” have not yet started reporting, as well as for listed SMEs (second and third wave companies, respectively), so that second wave companies will have to report for financial years starting from 1 January 2027 and third wave companies for financial years starting from 1 January 2028; and 
  1. by one year the deadline for Member States to implement CS3D in their national legislation (until 26 July 2027) and the first phase of the application (covering the largest companies, i.e. first wave companies) of the CS3D to apply from 26 July 2028. 

Member States must transpose the “Stop-the-Clock” Directive into national law by 31 December 2025. Both Finland and Sweden have commenced their respective legislative processes to implement the required regulatory amendments. 

Second proposal: The “Content” Proposal Directive 

The “Content” Proposal seeks to amend the CSRD and CS3D to reduce regulatory burden on in-scope companies and limit the trickle-down effect of reporting and due diligence obligations on smaller companies. Currently in draft form, the “Content” Proposal is advancing through the EU’s legislative process. The positions taken by the Council and expressed within the European Parliament provide insight into key issues that are likely to shape the upcoming trilogue negotiations on the substantive changes to the CSRD and CS3D. 

The EU Council’s Negotiating Mandate 

In June 2025, the Council managed to internally agree on and publish its negotiating mandate on simplifying the EU sustainability reporting and due diligence requirements. The Council’s key negotiating positions are outlined below. 

CSRD 

In terms of the CSRD, the Council proposes to make the following amendment to the Commission’s Omnibus Proposal presented in February 2025: 

  • Amend threshold to define in-scope companies: Raise the net turnover threshold to more than EUR 450 million to apply alongside the number of employee threshold of more than 1,000 proposed by the Commission. This is in stark contrast to the thresholds currently applicable under the CSRD and proposed in the Commission’s Omnibus Proposal, which is to have either a net turnover of more than EUR 50 million or a balance sheet total of more than EUR 25 million. Further, the Council supports the removal of listed SMEs from the scope of CSRD.  
  • Review clause: Amend Article 6 of the CSRD, i.e. the review clause, to allow future reassessment of whether and how the scope of the CSRD should be extended. 

CS3D 

In terms of the CS3D, the Council’s position is that the following amendment to the CS3D should be made: 

  • Amend threshold to define in-scope companies: Increase the threshold for in-scope EU companies to more than 5,000 employees and more than EUR 1.5 billion in worldwide net turnover, and for non-EU companies to more than EUR 1.5 billion in net turnover generated in the EU. In contrast, the thresholds suggested in the Commission’s Omnibus Proposal for EU companies were more than EUR 450 million worldwide net turnover and more than 1,000 employees, and for non-EU companies more than EUR 450 million in net turnover generated in the EU. 
  • Due diligence assessment: Limit due diligence requirements to only include in-scope company’s own operations, those of its subsidiaries, and those of its direct business partners (“Tier 1”). Under the proposal, in-scope companies shall have a “risk-based approach”, requiring them to make in-depth assessments only in areas where actual and potential adverse sustainability impacts are likely to occur. This amendment – which is aligned with the Commission’s Omnibus Proposal – would reduce what was an obligation to carry out a comprehensive mapping exercise, to an obligation to conduct a more general scoping exercise. 
  • Civil liability: Remove the EU harmonized liability regime and the requirement for member states to ensure that the liability rules are of overriding mandatory application in cases where the applicable law is not the national law of the member state. The Council’s mandate is aligned with the Commission’s Omnibus Proposal also in this regard. 
  • Climate transition plan (“CTP”): Limit the obligation for in-scope companies to adopt a CTP, and restrict supervisory authorities to only advise companies on design and implementation of those plans.  
  • Timeline: Postpone the deadline for member states to transpose the CS3D into national law by one additional year, to 26 July 2028, compared to 26 July 2027 as mandated by the “Stop-the-Clock” Directive. 

The EU Parliament Negotiating Mandate 

The Parliament has not yet released its official negotiating position on the Omnibus “Content” Proposal. Nonetheless, certain preliminary insights can be drawn from the draft report published by the Parliament’s Rapporteur on 12 June 2025. The draft report sets out multiple changes to the Commission’s proposal regarding both the CSRD and CS3D.  These changes include, for example, to align and increase the thresholds in CSRD and CS3D. The thresholds for in-scope EU companies would thus be more than EUR 450 million in net turnover and more than 3,000 employees. Another proposed change is to remove the mandatory requirement for companies to adopt a CTP under the CS3D.  

The Rapporteur’s draft proposal has been considered controversial in the relevant parliamentary committees and the final negotiation position taken by the Parliament is still under discussion. The Parliament is scheduled to adopt its final position in October 2025 after which negotiations between the Parliament and the Council may begin.  

Next Steps 

Trilogue negotiations between the Parliament and Council are expected to take place between October and December 2025. Opinions are particularly divided with respect to the CS3D, and it is difficult to predict with a high degree of certainty what the various elements of a compromise will look like. A final agreement on the proposed amendments to the CSRD, CS3D, and Taxonomy Regulation is anticipated by year-end 2025 or early 2026. 

The regulatory uncertainty adds complexity for affected companies navigating preparation strategies without clarity of the final requirements. Roschier continues to actively track the legislative process relating to the Omnibus Proposals to assess client implications and provide comprehensive guidance on emerging legal complexities during this regulatory transition. Please do not hesitate to reach out to the Roschier team if you have any questions or need advice.