The European Parliament has approved a sweeping recalibration of the European Union’s sustainability reporting and corporate due diligence framework, voting on December 17 to adopt the Omnibus I package, a legislative move that sharply narrows which companies will be subject to some of the world’s most far-reaching ESG rules.
The decision, passed with 428 votes in favour, 218 against and 17 abstentions, now awaits formal sign-off by the Council of the European Union before entering into force early next year, and its effects are expected to ripple far beyond Europe, including across African supply chains and capital markets.
At the centre of the package is a significant scaling back of the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive, two pillars of the EU’s Green Deal regulatory architecture.
Under the revised rules, sustainability reporting obligations will apply only to companies with more than 1,000 employees and annual turnover exceeding €450 million. This change removes roughly 90 percent of firms previously expected to fall under CSRD, dramatically reducing the number of entities required to disclose detailed environmental, social and governance data.
For African exporters and suppliers embedded in European value chains, the implications are immediate. Thousands of small and medium-sized firms that had begun preparing for extensive data requests from European clients are now likely to face fewer mandatory reporting demands, at least in the near term.
Subsidiaries and branches of non-EU companies will only be captured if they generate more than €200 million in annual turnover within the single market, a threshold that excludes most African-owned businesses operating in Europe.
Read also: ISSB eases financed emissions reporting under IFRS S2 as global adoption expands
The due diligence changes are even more consequential. Obligations under the Corporate Sustainability Due Diligence Directive will now apply only from July 2029 and only to companies employing more than 5,000 people with global turnover above €1.5 billion. The original ambition of mapping and addressing human rights and environmental risks across entire global value chains has been narrowed to a risk-based approach, requiring companies to focus on areas where harm is most likely, rather than conducting exhaustive supplier-by-supplier assessments.
Mandatory climate transition plans aligned with the Paris Agreement have been removed, as has the EU-wide civil liability regime that would have allowed affected parties to seek redress across borders. Enforcement will rest with national authorities, with financial penalties capped at 3 percent of a company’s global net turnover.
Supporters of the Omnibus I package argue that the revisions were necessary to protect European competitiveness at a time of slowing growth, high energy costs and intensifying global competition. Rapporteur Jörgen Warborn described the vote as delivering historic cost reductions while preserving the core objectives of EU sustainability policy.
According to the European Commission, the revised CSRD will still cover between 5,100 and 7,800 companies, retain the double materiality principle, and reduce data requirements by up to 70 percent.
For Africa, the shift presents a mixed picture. On one hand, the lighter regulatory burden eases pressure on African suppliers who lack the resources to comply with complex ESG disclosure frameworks. Many agribusinesses, textile producers and mineral exporters had raised concerns that compliance costs could lock smaller players out of European markets. The revised rules reduce that risk, at least temporarily.
Read also: How Tanzania is using Nature-Based Solutions to secure the future of its Tourism industry
On the other hand, the narrowing of scope raises questions about the pace of change in areas that matter deeply to African economies, such as labour conditions, environmental protection and responsible sourcing. European demand has been a key driver pushing companies to improve traceability in sectors like cocoa, coffee, tea, critical minerals and horticulture. With fewer companies legally required to conduct deep due diligence, progress may increasingly depend on voluntary standards, investor pressure and bilateral trade requirements rather than binding EU law.
The timing is also notable. African governments are simultaneously advancing their own sustainability and industrialization agendas, from the African Continental Free Trade Area to new green industrial policies focused on value addition and job creation. Several countries, including Kenya, Ghana, Morocco and South Africa, have invested heavily in aligning local standards with EU requirements to maintain market access. The Omnibus I decision changes the reference point those efforts were built around.
Investors are watching closely. European development finance institutions and private funds active in Africa have increasingly tied capital to ESG performance, often using EU regulations as a benchmark. While reporting requirements may soften, many financiers are unlikely to abandon due diligence expectations entirely, particularly in high-risk sectors such as mining, energy and large-scale agriculture.
The next step is procedural but important. Once the Council gives formal approval and the package is published in the EU’s Official Journal, the revised rules will enter into force within 20 days. From there, companies, regulators and partners across Africa will need to recalibrate their compliance strategies, investment plans and sustainability disclosures.
The Omnibus I vote marks a clear inflection point in Europe’s sustainability journey. It signals a move away from expansive regulatory reach toward a narrower, more selective approach, shaped as much by economic pressure as by environmental ambition.
For Africa, the outcome underscores a familiar reality: sustainability standards in major markets remain fluid, and long-term resilience will depend not only on external rules, but on domestic capacity, regional coordination and homegrown accountability systems that endure beyond shifts in European policy.
Engage with us on LinkedIn: Africa Sustainability Matters
Engage with us on LinkedIn: Africa Sustainability Matters
