We have seen continued developments in EU and Dutch sustainability legislation throughout the first half of 2025, with a notable increase in activity over the past two weeks leading up to the Dutch parliament's summer recess.

This article provides an overview of these developments. We highlight the latest progress on the "Omnibus Proposal" for a directive concerning certain corporate sustainability reporting and due diligence requirements, and we give an update on the implementation of the CSRD in the Netherlands.

Omnibus Proposal – state of play

In our February 2025 article, we discussed the Omnibus Proposal, which was published by the European Commission on 26 February 2025. Since then, the EU Council has adopted its negotiating position, while the proposal is currently still under review by the European Parliament.

European Council's negotiating position

Determined to finalise its position before the end of its Polish presidency on 30 June 2025, the EU Council adopted its negotiating position prepared by the permanent representatives of the member states on 23 June 2025.

Key differences to the European Commission's proposal relating to the CSRD include:

• Narrowed scope – In addition to raising the employee threshold to 1,000 as proposed by the European Commission, the EU Council adds a net turnover threshold of EUR 450 million. The Council's mandate also includes a review clause regarding the potential expansion of the scope.
• Possible exemption for certain "first wave" companies – Member states may exempt "first wave" companies that fall outside the CSRD's scope under the revised thresholds from reporting requirements for the 2025 and 2026 financial years.
• Extension of the subsidiary exemption – The Council mandate proposes that the exemption from having to prepare a sustainability statement if the parent company reports on a consolidated basis – as currently included in the CSRD – be extended to all listed subsidiaries.
• Strengthening of the value chain cap – Companies with less than 1,000 employees are granted the right to refuse information requests that exceed the voluntary ESRS (yet to be developed), with in-scope companies having to inform their value-chain partners of this right.

Key differences to the European Commission's proposal relating to the CSDDD include:

• Narrowed scope - While the European Commission does not cover the CSDDD's scope, the EU Council suggests increasing the thresholds to 5,000 employees and more than EUR 1.5 billion global net turnover.
• Changed timelines – The EU Council proposes deferring the CSDDD's applicability for the first group of companies in the new CSDDD scope by another year, to 26 July 2029. This deferral would be in addition to the deferral already given by the Stop-the-Clock Directive. Member states would need to implement the CSDDD by 26 July 2028, which is also an additional one-year delay compared to the European Commission's proposal. The EU Council also proposes moving the deadline for the Commission to issue practical guidelines back to 26 July 2027, as set out in the current CSDDD.
• Due diligence focused on risk-based approach – The Council’s mandate puts more focus on areas where actual and potential adverse impacts are most likely to occur. To ease burden significantly, the EU Council wants to maintain the limitation of relevant due diligence requirements to the company's direct (tier-one) business partners, and adds a review clause on a possible extension of the requirements beyond tier-one partners. The EU Council explicitly specifies that companies are supposed to base their efforts on reasonably available information, while the Commission has proposed "plausible information".
• Amendments to climate transition plan requirement – The Council proposes requiring companies in scope to adopt a transition plan to ensure through "reasonable efforts" that their business model and strategy contribute to the transition to a sustainable economy and to the limiting of global warming in line with the Paris Agreement. The Commission's proposal was stricter, by requiring the company to ensure, through "best efforts", compatibility of the business model and strategy; this changed approach is also reflected in proposed adjustments to recital (26a). The Council empowers supervisory authorities to advise companies on the design and implementation of those plans. To further reduce burdens and provide companies with sufficient time for adequate preparation, the EU Council proposes deferring the obligation to adopt transition plans by two years.
• Maximum fines – Taking a different line from the European Commission, the Council proposes reinstating the 5% global turnover cap on fines as included in the current CSDDD.

European Parliament's position expected in October 2025

While the EU Council has reached internal consensus, the European Parliament is still working towards its position. On 24 June 2025, the Legal Affairs Committee (JURI), responsible for coordinating the European Parliament’s position, discussed a draft report. The deadline for MEPs to table amendments to the draft report was 27 June 2025.

Key topics in the draft include proposals to further limit the scope of both the CSRD and the CSDDD by raising the applicability thresholds to companies with more than 3,000 employees and having a turnover exceeding EUR 450 million. The draft further introduces a provision allowing companies, without time limitation, to explain their efforts to obtain missing or incomplete value-chain information. The draft proposes removing the requirements for climate transition plans from the CSDDD.

The European Parliament is expected to finalise its negotiating position in October 2025. It could be difficult to reach consensus. Initial debates revealed significant divisions among MEP groupings , with positions ranging from calls to completely scrap the CSRD and CSDDD, to strong opposition to the Omnibus Proposal itself.

Once adopted by the European Parliament, interinstitutional negotiations (trilogues) will begin, aiming to reach agreement on a final Omnibus Directive.

Legislative process contested

The differences between the EU Council’s position and the evolving stance of the European Parliament, along with the internal divisions within the parliament itself, underscore the challenges ahead in reaching a consensus on the final text of the Omnibus Directive.

A further complicating factor in adopting a final Omnibus Directive is the growing criticism of the legislative process. On 18 April 2025, ClientEarth and seven other NGOs filed an official complaint with the European Ombudswoman, alleging that the Commission had deviated from its own Better Regulation guidelines by failing to conduct a public consultation and impact assessment without providing sufficient justification. In response, the European Ombudswoman opened an investigation into the Commission’s compliance with the Better Regulation guidelines. While the Ombudswoman does not have legal enforcement powers, it can issue recommendations and highlight procedural concerns to other EU institutions.

Separately, in a report requested by JURI and prepared by the European Parliament’s policy department for Justice, Civil Liberties and Institutional Affairs, the policy department also flags concerns about the process: "We generally prefer to speak to the substance of policy measures rather than to the process by means of which they were created. In this case, the process deficiencies are so great that they make it difficult to properly evaluate the substance. Bad process leads to bad outcomes."

Sustainability reporting standards – general revision and simplification

As part of the Omnibus package, the European Commission proposed targeted amendments to the sector-agnostic European sustainability reporting standards (ESRS). See our February 2025 article for more information.

The European Commission requested EFRAG, the advisory body responsible for preparing the ESRS, to issue an opinion on the proposed revision by 31 October 2025. On 20 June 2025, EFRAG published a progress report in response to EU Commissioner Albuquerque’s request for a detailed written update. The report outlines the intended modifications to the ESRS and their expected impact in reducing the reporting burden on companies.

EFRAG’s preliminary assessment suggests that activating several proposed simplification levers could reduce the number of required datapoints by approximately 50%, while maintaining the core objectives of the CSRD. Key levers include:

• Simplifying the Double Materiality Assessment (DMA), by introducing a top-down approach starting from the business model, rather than a bottom-up scoring process. Additionally, disclosures will be streamlined to confirm that when only a sub-topic is material, companies may limit their reporting to that sub-topic without triggering the full topical standard obligations. Emphasis will be placed on the objective of fair presentation.
• Enhancing readability and conciseness, by introducing greater flexibility. This includes the possibility to provide an executive summary at the beginning of the sustainability statement and to move detailed or technical information, such as specific metrics or EU Taxonomy-related disclosures, to appendices.
• Reforming disclosures on policies, actions and targets, by addressing the overlap between generic minimum disclosure requirements in ESRS 2 and the detailed mandatory specifications in the topical standards. Additionally, EFRAG proposes to drastically reduce the mandatory policy, action and targets specifications in the topical standards. EFRAG further clarifies that companies should report on policies, actions and targets only if they are in place and linked to material matters. As for material topics without related policies or targets, companies may list these centrally without providing justifications.
• Introducing a clearer structure and voluntary disclosure treatment, by revising how voluntary disclosures are presented to avoid confusion and reduce over-reporting, while also amending the general structure of the ESRS, separating clearly mandatory and non-mandatory content.
• Ensuring greater interoperability, by considering opportunities to align provisions and avoid unnecessary misinterpretations or differences, particularly between the ESRS and the ISSB Standards.

Next steps

The final proposals (exposure drafts) will be published in the last week of July 2025, followed by a short consultation period until the first week of September 2025. EFRAG has formally asked the European Commission for an extension of the 31 October 2025 deadline. In a letter to the Commission, EFRAG indicated that it is willing to extend the duration of the consultation if the Commission is willing to extend the deadline. The Commission has not yet responded.

The revised ESRS will be adopted through a delegated regulation, no later than six months after the full Omnibus revisions enter into force. The Commission expects the updated ESRS to apply to reporting for the 2027 financial year, with an option for companies to apply them voluntarily for the 2026 financial year.

Postponement of phased-in ESRS requirements announced

In a leaked draft proposal, the European Commission announced its intention to implement a "quick fix" amendment to the phased introduction of certain current ESRS reporting requirements.

The ESRS currently provide for a phased introduction of certain reporting requirements until the second year of reporting, with certain provisions applying to all companies in scope of the CSRD and others to companies with fewer than 750 employees. The Commission may now announce a two-year additional deferral of the application of certain phased-in reporting obligations, pending the final Omnibus Directive and the upcoming broader revision and simplification of the ESRS framework.

These changes would aim to accommodate "first wave" CSRD companies by (i) allowing these companies to avoid implementing additional disclosure requirements that will change under the revised and simplified ESRS, and (ii) protecting companies that may ultimately fall outside the CSRD’s scope from unnecessary reporting obligations.

The Commission has not yet published a draft proposal. According to the leaked draft, the delay would be intended to apply retroactively from 1 January 2025, meaning this would affect the sustainability statements in 2025 annual reports of "first wave" CSRD companies.

Dutch CSRD implementation – current situation

Although the deadline passed almost exactly a year ago, implementation of the CSRD in the Netherlands is still pending.

The Dutch government prefers to integrate the implementation of the Stop-the-Clock Directive (see our April 2025 article for more information on the directive) and, if possible, the Omnibus Proposal into the ongoing CSRD implementation process.

On 10 June 2025, an amendment memorandum to the CSRD implementing bill, implementing the CSRD part of the Stop-the-Clock Directive, was published. The draft CSRD implementing decree will be amended accordingly. The amendment memorandum will be discussed during a procedural meeting of the Standing Committee on Finance on 3 July 2025.

It remains unclear what amendments to the CSRD implementing bill and the draft implementing decree may result from the ongoing negotiations about the Omnibus Proposal. The CSRD implementation process in the Netherlands will therefore continue with due consideration of the Omnibus Proposal developments. This could lead to further delays in implementing the CSRD. In this context, it is important to note that the European Commission has reiterated the urgency of transposing the CSRD to national law and has explicitly stated that it sees no scope for postponing this obligation.

Adding to the uncertainty, the political situation – with a caretaker government in charge – has introduced an additional layer of complexity. However, on 17 June 2025, the Dutch parliament's Standing Committee on Finance recommended that the bill implementing the CSRD not be designated as "controversial". This allows the legislative process to proceed despite the government's caretaker status. The committee also set a deadline of 24 June 2025 for the submission of questions on the CSRD implementing bill. These questions were published on 27 June 2025, and cover the option of the CSRD implementing bill taking effect retroactively; the possibility of further simplifying the CSRD; discussion and vote on the sustainability report at the AGM; and the implementation process. It is unclear when the government will provide answers to these questions.

On 20 June 2025, the European Securities and Markets Authority (ESMA) published a statement on the supervision of CSRD sustainability statements. ESMA acknowledged the uncertainty as a result of the delayed CSRD implementation in some member states and the ongoing legislative process related to the Omnibus Proposal. In this context, ESMA emphasised that the application of its Guidelines on Enforcement of Sustainability Information, published in April 2025, should be "proportionate and realistic" during the initial years of reporting.