A more workable sustainability framework for Europe’s PE/VC ecosystem: key takeaways from the provisional Sustainability Omnibus agreement

The provisional agreement on the Sustainability Omnibus Package, reached on 8 December 2025, marks an important signal: Europe can pursue its ambition to provide a clear baseline for companies’ sustainable behaviours and orient capital flows towards sustainable activities, while ensuring that regulatory requirements remain targeted.

A framework that simplifies obligations by focusing on what matters allows companies and investors to contribute to the EU’s agenda in ways that are effective, relevant, and aligned with operational realities. Reducing administrative burdens does not always mean losing sight of progress; rather, it can enable the flexibility needed to act where it matters most.

Invest Europe and its members have never advocated for deregulation or the removal of sustainability rules. Our position has always been clear: we support simplification and the workability of sustainability requirements. Invest Europe and its members have remained fully committed to advancing sustainability across investments and operations, contributing to the EU’s agenda for a sustainable transition. Clear, well-designed regulation and high-quality reporting can enhance strategic decision-making and strengthen the companies in which our members invest. At the same time, the growing complexity and volume of rules risked shifting attention away from innovation and productivity toward compliance.

Striking the right balance between compliance and value creation is a difficult exercise, and challenges will remain as companies continue adapting to new frameworks. Businesses and investors alike need predictability to plan and invest with confidence.

Against this backdrop, the provisional Sustainability Omnibus agreement represents a balanced adjustment. It provides the clarity that companies need, and it is important that this balance is maintained. This balanced approach is reflected in several elements of the agreement, which together make the framework more practical and proportionate.

Focusing requirements where they matter most

The agreement substantially narrows the scope of both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). With higher size thresholds, many PE/VC firms and their portfolio companies will fall outside mandatory reporting and due-diligence obligations.

This shift brings several practical implications for the industry:

• Lower administrative and compliance burdens, enabling companies to focus resources on growth and innovation. 

• Clear boundaries, with a simple, binary structure whereby full sustainability reporting standards applying only above the threshold and voluntary, scalable standards below it.

• Better alignment between regulatory requirements and existing PE/VC-driven sustainability practices.

The decision to exempt financial holding entities from CSRD also addresses long-standing concerns about proportionality where firms do not exercise operational control.

A targeted, risk-based approach to due diligence

The agreement also adjusts the CSDDD’s due-diligence requirements to make them more risk-based and practical. PE/VC fund structures and investors’ downstream activities would be excluded from the framework – an important clarification for the industry.

The revised approach allows companies to concentrate efforts on the parts of their value chain where adverse impacts are most likely, and prioritize direct business partners when several areas present similar levels of risk.

These changes support a more proportionate system, though much will depend on how the approach is translated into guidance. It will be important that implementation does not unintentionally push companies to focus narrowly on first-tier suppliers rather than on actual areas of risk.

Looking ahead

While the agreement is an important milestone, formal adoption and detailed implementation work are still ahead. Key elements – including the value-chain cap, sustainability reporting standards (voluntary and mandatory), the treatment of financial holdings, and non-EU undertakings – will only become clear once the final legislative text and technical guidance are published.

Invest Europe will continue to work with policymakers to ensure the EU’s sustainability framework remains practical for investors and suited to the financing needs of companies at all stages of growth.