The EU ESG rules are undergoing extensive revision as part of the EU's “Omnibus” process that began with the European Commission's release in February 2025 of a set of amendments and has already resulted so far in a two-year delay of the EU ESG rules' application. As a reminder, the Omnibus is looking to significantly amend, among other things, the EU's Corporate Sustainability Reporting Directive ("CSRD") and the Corporate Sustainability Due Diligence Directive ("CS3D").
The ECON committee (the “Committee”) of the European Parliament has reportedly issued a draft set of amendments to the CSRD and CS3D, which, along with the JURI Committee, are likely to form the basis of the European Parliament's proposed Omnibus text.
The Committee's proposed draft, if published as reported, would seek to address a number of seeming “loopholes” (or, as some practitioners have claimed, drafting errors) in the original CSRD and CS3D that may help rationalize and reduce the burden of certain aspects.
These proposed changes include:
- Increasing the employee threshold to 3,000 for application of both the CSRD and CS3D;
- Clarifying that the 3,000 employee threshold also applies to non-EU (including U.S.) groups that would have to report on a global basis under Article 40a of the CSRD (starting in 2029 for FY2028 information); and
- Excluding EU intermediary holding companies from the scope of CSRD reporting.
These changes would likely have a real practical impact on reducing the burden on non-EU (including U.S.) companies in particular, such as by:
- Significantly reducing the number of in-scope EU companies and EU subsidiaries and subgroups of non-EU (including U.S.) companies;
- Fixing provisions in the European Commission's draft Omnibus bill that would otherwise have resulted in non-EU (including U.S.) companies being more "easily” caught by CSRD than EU groups; and
- Eliminating a large part of the scoping exercise's complexity and redundant reporting requirements for in-scope EU companies and non-EU groups. (Currently, intermediate EU holding companies may trigger consolidated CSRD reporting requirements at the level of the EU subgroup.)
While these proposed changes to the CSRD and CS3D would be welcome simplifications for many practitioners, these substantial proposed amendments further demonstrate the volatility of the current situation around the EU ESG rules, and the need to stay aware of potential forthcoming reporting and due diligence obligations in the EU.
An influential European Parliament committee has drafted an amendment to reduce the number of mandatory European Sustainability Reporting Standards (ESRS) to no more than 100 and voluntary datapoints to 50, according to a leaked document.
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