Omnibus 1: Current Developments in the EU and Implications for the Sustainable Competitiveness Agenda

The European Union is currently at a critical stage as it seeks to align economic growth objectives with sustainability requirements. The recent progress in negotiations on the Omnibus 1 legislative package highlights differing views within EU institutions regarding the scope and pace of these changes.

1. Decision of the EU Council

This week, the Council of the EU adopted its position on Omnibus 1, expanding on the European Commission’s original proposal, particularly in terms of simplifying regulatory obligations for businesses. According to some observers, this approach weakens provisions intended to support sustainable competitiveness—especially within the framework of legislation such as the CSRD directive. There is a lack of impact assessments on how the reduction of obligations might affect the achievement of long-term economic and environmental goals. The current debate primarily focuses on reducing costs for businesses, while broader economic consequences and the costs of inaction are receiving less attention.

2. Developments in the European Parliament

The proposal is currently being reviewed in the European Parliament by MEP Jörgen Warborn (EPP). His draft report emphasizes the need to reduce regulatory burden, but there are concerns that, under the current wording, up to one third of Member States could end up with fewer than 10 companies subject to CSRD.

Such developments could limit the availability of ESG data, which is essential for strategic decision-making by companies and investors, potentially slowing down both the digital and green transitions. A representative of the European Commission warned during the discussions that some of the proposed wording changes—such as those concerning the value chain—could negatively impact investor confidence and the stability of the internal market.

3. Next Steps

While some parliamentary groups have indicated a willingness to seek compromise, the outcome will depend on political agreement in the coming months. A key question is whether the European People's Party (EPP), which holds power in several national coalitions, will support a centrist consensus or whether political tensions around this agenda will continue to escalate.

>>> Read more detailed commentary from our team in Brussels

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Summary of the proposed changes (click for larger resolution)