Council Clears the Path for revised CSRD and CS3D

In a significant step to reduce administrative burden and cut red tape for companies, the Council of the European Union has adopted its position on the proposed revision of the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CS3D) as part of the so-called First Omnibus Package. Both proposals were presented earlier this year by the European Commission and aim at simplifying existing requirements for Companies, which would be set to enter into force next months and years. The move marks a key procedural milestone and concludes the Council’s internal deliberations, enabling the start of interinstitutional negotiations once the Parliament will have approved its mandate.

As a response to growing concerns about the complexity and cost of EU regulation, particularly in the context of heightened political pressure to bolster competitiveness, the European Commission is putting forward horizontal and vertical “Omnibus Packages”, amending different legislative measures to deliver targeted simplifications across sectors.

The Council’s general approach on the first package reflects several significant concessions to industry, such as further reducing the scope of both Directives, and softening the requirement for companies to adopt and implement climate transition plans. Under the revised approach, businesses would instead be expected to outline actions toward implementation, paired with a two-year delay in the deadline for such plans.

The Council’s approval clears the way for interinstitutional negotiations but those talks cannot begin until the European Parliament adopts its own negotiating position. Rapporteur MEP Jörgen Warborn presented his draft report to the JURI committee this week. The MEPs will now table their amendments with a view to holding a Committee vote in early October, followed by a potential plenary vote later that month or in November.

The Omnibus Package signals a recalibration of the EU’s regulatory approach, aiming to balance ambition with administrative feasibility. While the Council’s position signals a coordinated effort by Member States to rebalance regulatory ambition with economic realism, the Parliament’s response remains to be seen. In a political environment increasingly attuned to both sustainability and competitiveness, the outcome of the forthcoming negotiations will help define the tone of EU policymaking in the second half of the mandate.