On 23 June 2025, Member States’ representatives agreed on the Council’s negotiating mandate, simplifying sustainability reporting. The scope of the sustainability disclosure regime remains the same as under the Commission’s Omnibus proposal (10,000 companies), whereas the scope for due diligence and adoption of decarbonisation plans is narrowed, leaving an estimated 1,000 companies covered.

Introduced as part of the Clean Industrial Deal, the Omnibus aims to cut the sustainability-related red tape by excluding more companies from requirements to collect and publish data on their greenhouse gas emissions, electricity use, and climate targets, etc. obligated through the Corporate Sustainability Reporting (CSRD) and Corporate Due Diligence (CSDDD) directives.

Bearish legislative signals might contribute to declining GO prices in the medium to long run; however, the sentiment might be cushioned by existing decarbonisation commitments, sustainability requirements passed down the supply chain, renewable supply constraints and rising industrial demand for renewable electricity.

Details

Scope reduction

The CSRD scope suffered further losses. The initial Omnibus proposal would see the pool of the CSRD-compliant companies shrink from 50,000 to 10,000. The Council’s tighter thresholds could bring this number further down (see below).

As for the CSDDD, EU countries went beyond the Commission’s proposal by suggesting capturing only the largest companies through higher employee count and net turnover limits, reducing the number of impacted companies (see below).

Transition plans

The obligation to implement decarbonisation plans (or ‘transition’ plans in Brussels speak), prescribed by the CSDDD, is removed as suggested by the Commission’s omnibus package. Instead, companies need to outline emissions reduction steps in their plans.

Furthermore, these plans need no longer be “compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5 °C in line with the Paris Agreement <…> and the objective of reaching climate neutrality by 2050”.

In lieu of this, companies need to “contribute to the transition” through “reasonable efforts” (instead of “best efforts”) in case specific circumstances may lead companies to be unable to reach these objectives. Such a distinction is crucial, as the Paris Agreement targets climate efforts at the national level, rather than the individual level: disaggregating global targets to enterprises is contrary to the Paris Agreement itself.

To further reduce administrative burdens, the Council postpones the deadline for transition plans adoption to 26 July 2031.

Next steps

Next, the European Parliament needs to reach an agreement on its official position before interinstitutional talks can commence. Denmark, which will succeed Poland on the presidency of the Council of the EU on 1 July 2025, will facilitate the trilogues. The Danes are known in the EU for pushing for more ambitious green goals and will likely try to “save” the directive.

Veyt accessed a leaked draft parliamentary report, dated from the end of May 2025, which raises the company size threshold to 3,000 employees and a turnover of EUR 450 million, further reducing the number of companies in the CSRD scope. The co-legislator proposes removing climate transition plans provisions under the CSDDD and voluntary disclosure of “any” plan, deleting reference to implementing actions, the 1.5 degrees objective, the Paris Agreement and the EU climate neutrality goal.

This coincides with the co-legislator’s deregulatory spree: recently, under the auspices of the largest group in the Parliament, the center-right European People’s Party (EPP), the Green Claims Directive was called off the negotiation table.

Market impact

Weakened sustainability framework laws signal political recalibration in Brussels and a transition from the Green Deal towards the Clean Industrial Deal, which puts competitiveness first.

If the Council’s proposal is endorsed by the Parliament, this could liberate 10,000 companies from due diligence and transition plan adoption duties, with fewer than 1,000 European companies subject to the CSDDD, according to some research estimates.

Other estimates suggest that limiting the CSRD scope in line with the Parliament’s draft position would, in turn, result in just over 3,000 companies impacted in Europe (see table below).

The GO market prices slid on the back of the Omnibus proposal back in February 2025, continuing the downward trend observed since 2024. More bearish news might worsen the market sentiment medium to long-term. Currently, the market is experiencing high volatility, linked to last-minute buying ahead of the German disclosure deadline and a tightening GO supply. Consult our weekly market report and our medium-term market balance forecast to find out more.

Countering the effects of the legislative signals are sustainability requirements that will likely be passed down the supply chain, thereby somewhat cushioning the regulatory blow for the GO market.

In addition, the industrial sector forms a solid base for GO demand. According to Veyt research, as many as 9,000 companies in the EU and EEA that receive state aid could be procuring GOs to qualify. Read our coverage on beneficiaries for part of the costs incurred in the European carbon market (EU ETS). A separate analysis will follow on the number of companies benefiting from the discounted electricity levy scheme.

The first wave of CSRD-scope companies submitted their reports in 2025 for the previous year. Veyt reviewed the first batch of these reports, concluding that companies buy GOs widely to cover their Scope 2 GHG emissions and use the market-based method to set their climate targets. Given their climate action commitments, even if the CSRD scope is reduced, the decarbonisation efforts already set in motion are likely to continue.

In parallel, the European Financial Reporting Advisory Group (EFRAG) is currently conducting work to revise the European Sustainability Reporting Standards (ESRS) to slash the number of reporting datapoints by 50 %, as mandated by the European Commission. The streamlined ESRS are expected to be finalised and presented by 31 October 2025.