On 26 February 2025, the European Commission (EC) released a press release and a new package of proposals (the Omnibus) to amend some key pillars of the European Green Deal.
These are the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Taxonomy Regulations. Additionally, the Omnibus proposes amendments to other aspects of European Union (EU) regulation. These proposals will now be submitted to the European Parliament for adoption in approximately four weeks’ time.
The Omnibus
The overall goal of the Omnibus is to reduce reporting burdens, particularly for smaller and mid-sized entities, and increase efficiency in sustainability reporting. This comes because of pressure to foster a growth environment in the EU.
If the Omnibus is adopted as proposed, it will have a significant impact on multiple areas of EU regulation.
CSRD
The Omnibus significantly changes several key areas set out in the CSRD. The major changes include:
- Reduction in scope: The CSRD currently applies to all large undertakings (entities meeting two of the following three thresholds: €50 million net turnover, €25 million balance sheet total, 250 employees), as well as small and medium enterprises (SMEs) with securities listed on an EU regulated market. The Omnibus proposes to reduce the scope to include only large undertakings with more than 1,000 employees (entities with 1,000 or more employees and either €50 million net turnover or more than a €25 million balance sheet total). This means that any entity with fewer than 1,000 employees will no longer be in scope but may choose to report voluntarily based on the voluntary standards for SMEs (VSME). The EC estimates that this will reduce the number of entities in scope by approximately 80%.
- Value chain cap: Entities no longer in scope of the revised requirements will have the ability to restrict the information that can be requested from them by entities that remain within scope. This will be limited to the information required by the VSME, which is less comprehensive than the full European Sustainability Reporting Standards (ESRS) requirements. This modification will ensure that sustainability reporting requirements for large entities do not burden smaller entities in their value chains.
- Postponement of reporting requirements: The Omnibus proposes to postpone by two years the reporting requirements for entities currently in scope of the CSRD required to report as of 2026 or 2027 (Waves 2 and 3).
- Limitations to additional requirements: The Omnibus proposes to remove the ability of the EC to adopt sector specific standards and remove the possibility of the EC requiring reasonable assurance rather than limited assurance.
EU Taxonomy
The proposed Omnibus will also amend the EU Taxonomy Regulation. The major changes include:
- Reduction in scope: The current scoping for EU Taxonomy reporting obligations is consistent with the CSRD as adopted. The Omnibus proposes to limit EU Taxonomy reporting obligations to only the largest entities (> 1000 employees and <EUR 450M turnover, consistent with the CSDDD scope), with a voluntary reporting option for entities in scope of the revised CSRD requirements.
- Partial taxonomy alignment: The Omnibus proposes to create a new option for reporting on activities that are partially aligned with the EU Taxonomy. This aims to create an environment that fosters a gradual transition to the use of the EU Taxonomy over time.
- Materiality: The Omnibus proposes to introduce a financial materiality threshold for EU Taxonomy reporting (e.g. activities not exceeding 10% of total turnover, capital expenditure, or total assets).
- Disclosure templates: The Omnibus proposes to reduce the number of required reporting templates and reduce the number of data points required for the templates that remain in place.
- Do no significant harm (DNSH) criteria: The Omnibus proposes to simplify certain complex DNSH criteria for pollution prevention and control with an aim to eventually simplify all DNSH criteria.
- Ratio adjustments: The Omnibus proposes to adjust certain ratios for financial institutions, including the calculation of Green Asset Ratio (GAR). These adjustments are intended to simplify the calculations that are currently required.
CSDDD
The Omnibus proposes to also change several key areas related to the CSDDD. The major changes include:
- Postponement of application of requirements: The Omnibus proposes to postpone the transition deadline (to 26 July 2027) and the first phase of application of the requirements (to 26 July 2028).
- Simplification of requirements: The Omnibus proposes to simplify CSDDD requirements by focusing systematic due diligence requirements on direct business partners, with requirements for indirect partners only when plausible information suggests adverse impacts may arise. Additionally, the Omnibus proposes to prolong the interval between regular periodic assessments from two to five years, with an ad hoc requirement to update the assessments if there is a basis to believe they are no longer adequate.
- Reduce trickle-down effect: Like the CSRD changes, the Omnibus proposes to reduce reporting burden on small and medium entities (i.e. entities that have fewer than 500 employees) in the value chains of larger entities by limiting the amount of information that can be requested by larger entities to the information specified in the CSRD VSME.
- Other: Additionally, the Omnibus proposes to increase harmonisation of due diligence requirements, align requirements on the adoption of transition plans for climate mitigation with the CSRD, and remove the harmonised EU conditions for civil liability and review close on inclusion of financial services in scope of the CSDDD.
What's next? What is certain in these uncertain times?
During the past period when organizations have been working to implement sustainability guidelines, we have learned some important lessons. We must continue to leverage these lessons to keep sustainability and transparency on the agenda.
Our recommendations
- Prioritise double materiality analysis (DMA). Many companies have already conducted a DMA. This analysis is also included in the Omnibus proposal, which makes sense. Good sustainability information for strategic planning, reporting and steering focuses on the most important sustainability-related risks and opportunities that come to the organization from the outside, and on the sustainability topics with which the organization has the greatest impact on people and the environment. The double materiality principle helps to maintain focus and contributes to resilience.
- Map your map the value chain. This element remains in place for companies, even under the new proposal. Keep engaging with stakeholders and chain partners. This always provides useful and relevant information that contributes to better risk management and insight into new strategic opportunities. Under CSDDD, companies are still expected to monitor their chain, this also applies to indirect business partners, if there is information that points to possible abuses.
- Track ambitions, goals, and actions. The more concrete companies have established sustainability policies and measurable goals, the better they know what they still must do. Time and resources can then be used effectively, especially when mandatory reporting receives less attention.
- Measure to manage. Keep collecting and monitoring relevant ESG data. Without control information, sustainability initiatives go in all directions. Data on key topics such as energy consumption, diversity and employee engagement or resource characteristics remain important to have in view. Where do dependencies lie? Without data, effective management is impossible.
- Reporting helps internally and externally. It is a way to provide insight into progress and inform stakeholders about relevant business information, just like communication about financial results. So, continue to prepare for reporting. Now that the first CSRD reports have been published, the expectation is that many will continue to see the CSRD as the gold standard.
Developing a future-proof sustainability strategy
Many organizations have taken important steps with us to implement CSRD, CSDDD and EU Taxonomy. These guidelines are designed to make sustainability efforts more transparent and to us move in developing our own sustainability strategy.
Beyond compliance these frameworks support to corporate social responsibility and long-term resilience – a vision we fully endorse.
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