The European Parliament has rejected a compromise agreement intended to shape its negotiating position on the EU Commission’s Omnibus I proposal. The compromise would have resulted in more significant reductions in the EU’s sustainability reporting and due diligence regulations than those initially proposed by the Commission, though less severe than those advocated by right-wing parties.
The proposal was narrowly defeated, with 309 votes in favour, 318 against, and 34 abstentions. This result sends the Omnibus initiative back to the drawing board within Parliament, creating uncertainty for businesses about the final regulatory landscape. Some lawmakers are advocating for smaller reductions to the EU’s sustainability regulations, while others are pushing for more substantial cuts.
The vote was conducted via secret ballots, leaving it unclear which lawmakers supported or rejected the proposal. The Omnibus package, introduced by the Commission in February as part of its simplification agenda, aims to enhance European competitiveness and reduce compliance burdens on companies. It suggests changes to several regulations, including the [Corporate Sustainability Reporting Directive](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32021L2101) (CSRD), the [Corporate Sustainability Due Diligence Directive](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022PC0071) (CSDDD), the [Taxonomy Regulation](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32020R0852), and the [Carbon Border Adjustment Mechanism](https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12228-Carbon-Border-Adjustment-Mechanism_en) (CBAM).
Key changes proposed by the Commission include expanding the scope of the CSRD to exclude around 80% of companies by raising the employee threshold from 250 to 1,000, while maintaining the CSDDD’s 1,000-employee threshold. The initiative also proposes focusing due diligence efforts primarily on direct business partners and restricting the data that smaller supply chain companies must provide.
Before the agreement, lawmakers were sharply divided, with left-leaning parties favouring smaller regulatory cuts and right-wing factions seeking to dismantle the CSRD and CSDDD entirely. The European People’s Party (EPP) proposed a compromise that retained the CSRD’s 1,000-employee scope but added a €450 million revenue threshold. It also increased the CSDDD threshold to companies with over 5,000 employees and €1.5 billion in revenues. The EPP reportedly threatened to support a more right-leaning proposal, which would have expanded the CSRD scope to 1,750 employees and removed CSDDD requirements for climate transition plans.
Negotiations between the EU Parliament and Council on finalising the Omnibus package were scheduled to begin this week but have been delayed. The next parliamentary vote on the Omnibus is now set for 13 November.
Omnibus rapporteur Jörgen Warborn of the EPP stated at a press conference that although it is unclear who voted against the agreement, 31 members of the centre-left S&D party opposed the deal, which influenced the outcome given the close vote. Warborn expressed the need for clarity to foster business growth and prosperity in Europe.
EU Parliament President Roberta Metsola remarked that the vote demonstrated a lack of consensus in Parliament, with some members feeling the compromise did not go far enough and others believing it went too far.
