Sustainability reporting and due diligence: the European Parliament retrocede on the due diligence directive

On November 12, 2025, the European approved Omnibus 1, a proposal aimed at simplifying sustainability reporting and due diligence obligations for businesses. The goal is to reduce the bureaucratic and administrative burden on small businesses, offering them greater protection from larger partner companies, which will no longer need to rely on information provided by smaller entities.

The proposal suggests limiting the obligation for sustainability reporting, based on the taxonomy rule (classification of sustainable investments), to companies with at least 1,750 employees and with a net annual turnover of €450 million euros. Due diligence requirements will only apply to large corporations with over 5,000 employees and an annual net turnover exceeding €1.5 billion euros. The intent is to allow companies to adopt a risk-based approach to monitor and identify their impact on people and the planet, without depending on information from smaller partners.

Furthermore, companies will no longer be required to prepare a transition plan to align their business model with the Paris Agreement. Sanctions are envisaged for non-compliance with due diligence requirements and non-compliant companies will be liable at the national level rather than the EU level, and required to fully compensate victims for damages caused.

These changes significantly alter the original framework of the European Corporate Sustainability Due Diligence Directive (CSDDD). In particular:

1. The obligation for companies to have an emissions reduction plan is eliminated, signaling a relaxation of European commitment to fighting climate change.
2. Harmonized civil liability at the European level is abolished, potentially creating disparities in the protection of victims of corporate harm across member states.
3. The application of the CSDDD, already limited to 0.05% of European companies, is further reduced, exempting the majority of businesses.

Negotiations with EU member governments, which have already adopted their position, began on November 18, with the aim of finalizing the legislation by the end of 2025. Numerous warnings have come from authoritative institutions such as the European Central Bank and from over 30 former European leaders, cautioning against the risks of such deregulation.

Meanwhile, Oxfam and the organizations of the Enterprise 2030 Campaign continue to demand what they consider the bare minimum in a healthy democracy:

• Common rules that guarantee access to justice;
• Binding, not voluntary, climate plans;
• A scope of application that leaves no loopholes for exploitation.