Redrawing Lines in the Sustainability Debate

What began in November as a controversial vote on the Omnibus package has now culminated, in early December, in an interinstitutional (trilogue) agreement that both reflects and tests these new political dynamics. When the European Parliament adopted its position on the Omnibus reforms to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), the way the vote was won became the story: for the first time this term, the Parliament’s largest group, the centre-right European People’s Party (EPP), secured a majority not through the centrist coalition that underpins the von der Leyen Commission, but through a partnership with the European Conservatives and Reformists (ECR) and the far-right Patriots for Europe (PfE). That majority delivered a clear outcome in Plenary and signalled that the EPP now has an alternative route to parliamentary victories – one that moves right rather than towards its traditional allies in S&D and the liberal Renew Europe.

This precedent carried directly into the atmosphere surrounding trilogues. Civil society organisations, trade unions, and several MEPs from S&D, Renew, and the Greens warned that the Parliament's right-leaning majority had set the tone for the negotiations, especially on climate transition planning and the extent of due diligence obligations. At the same time, Member States, led by The Danish Council Presidency, entered the process with their own priorities rooted in burden reduction and competitiveness. Although Council and Parliament positions were already relatively aligned on areas such as CSDDD scope thresholds and the removal of harmonised civil liability, the political context made compromise more sensitive, with climate obligations, impact identification, and the scale of reporting requirements emerging as the most contentious issues.

The trilogue outcome now confirms how these dynamics ultimately settled. Politically, the deal broadly mirrors the direction set by the Parliament’s right-leaning majority: reporting requirements are cut back, climate transition planning obligations under CSDDD are removed entirely, and the due diligence regime is reframed around a targeted scoping exercise rather than full value-chain mapping. At the same time, the final agreement does not land fully on Parliament’s terms. The CSRD scope threshold – set at 1,000 employees and €450 million turnover – aligns instead with the Commission and the Council, not with the Parliament’s proposed 1,750 employees. The exemption for financial holding companies and transition relief for “wave one” reporters falling out of scope reflect institutional balancing rather than ideological victory. Similarly, the CSDDD’s final scope of 5,000 employees and €1.5 billion turnover, its penalty cap of 3% of global turnover, and the postponement of application to 2029 all reflect a negotiated centre of gravity shaped jointly by Council caution and Parliament’s simplification ambitions.

The result is a package that carries the imprint of the new majority dynamics. It is a settlement shaped partly by the Parliament’s right flank, partly by the Council’s long-standing focus on burden relief, and partly by Commission insistence on preserving the core structure of both directives. As Omnibus now reaches its conclusion, the political question that lingers is not just how the sustainability framework has changed, but how the EPP’s experiment with alternative majority-building will reverberate across the next wave of files. With negotiations on major reform proposals still ahead – including the SFDR review and further adjustments to the Taxonomy – the centre is no longer the Parliament’s default landing ground. Whether this becomes a one-off deviation or the beginning of a more structural realignment will shape the political dynamics of EU sustainable finance policy throughout 2026.