EU Omnibus: not deregulation, but a shift of enforcement to the market

The recently reached trilogue agreement on the EU Omnibus package does not mark deregulation, but a fundamental shift in how sustainability is enforced. As regulatory requirements are scaled back, the market takes over. Companies that prepare now strengthen their access to capital, contracts, and long-term resilience.

This is stated by ESG regulation specialist Madiha Mouchtak MBA in a recent in-depth analysis of the implications of the Omnibus package.

What has changed?

On 9 December 2025, the European Commission, the European Parliament, and the Council reached an agreement on the Omnibus I package. The key changes include:

CSRD is limited to companies with more than 1,000 employees and over €450 million in turnover (Council compromise).
CSDDD applies only to very large companies with more than 5,000 employees and over €1.5 billion in turnover.
The obligation to prepare a climate transition plan under the CSDDD is removed.
EU-wide civil liability is shifted to the national level.
Compliance timelines are postponed, in line with the Omnibus proposal.

Key conclusions

In the final phase of negotiations, the European Parliament advocated for a very narrow scope (more than 1,750 employees), while the Council broadened this to more than 1,000 employees. The final outcome clearly reflects the Council’s compromise.

The Omnibus package results in a significant reduction of mandatory sustainability obligations. At the same time, climate transition plan requirements under the CSDDD are removed and civil liability is decentralised. For many companies, direct regulatory pressure therefore decreases.

From regulation to market enforcement

For companies outside the formal scope, regulation is increasingly replaced by market dynamics. Banks, investors, and large corporate clients become the primary ESG enforcers. They continue to request sustainability data, but increasingly on the basis of standardised and proportionate information.

In this context, VSME takes on a central role. VSME (Voluntary Sustainability Reporting Standard for SMEs) is an EU-developed voluntary ESG reporting standard for small and medium-sized enterprises. It offers a streamlined and practical framework for capturing ESG information, without the complexity of full CSRD compliance. For many companies, VSME functions as a common language towards banks, investors, and larger clients.

Strategic significance

Less regulation does not mean less pressure, but different pressure. As governments step back, the market steps forward. Transparency, comparability, and reliability of ESG data remain decisive.

In this landscape, VSME is evolving into a commercial ESG passport: companies that adopt the standard early improve access to finance, strengthen their position in the value chain, and build competitive advantage.

What leaders should decide now

Executives should act decisively:

Assess whether the organisation is directly in scope or exposed through the value chain.
Use VSME as a pragmatic baseline, rather than full CSRD implementation.
Align early with banks, investors, and key clients.

The core message is clear: those who anticipate now turn sustainability into strategic advantage.