On February 26, 2025, the Commission announced that it has adopted a new omnibus package of proposals designed to “simplify EU rules, boost competitiveness, and unlock additional investment capacity.” Commission President Ursula Von der Leyen first hinted at the possibility of an omnibus package back in November 2024.
The omnibus package introduced on February 26 aims to reduce administrative burdens by 25% and by at least 35% for SMEs by introducing drastic changes to the CSRD, the CSDDD, the EU Taxonomy, and certain other Green Deal regulations. The Commission estimates that the proposed changes could save businesses around €6.3 billion.
The European Parliament and the European Council will now consider the proposal. If they adopt it as proposed, the omnibus package would make the following important changes to the CSRD:
- Reduce the scope of reporting companies. The proposed changes would significantly reduce the number of companies in scope of the CSRD.
- Large EU undertakings. As proposed, the reporting requirements would apply only to large EU undertakings and listed SMEs with more than 1,000 employees and either (i) turnover above €50 million or (ii) a balance sheet total above €25 million. Currently, the CSRD applies to all large EU undertakings that satisfy two of the three following thresholds—(a) €50 million net turnover, (b) €25 million balance sheet total, and (c) 250 employees—and all listed SMEs.
- Non-EU parent companies. As proposed, non-EU parent companies will only be in scope if they generated EU-derived turnover of €450 million (for two consecutive financial years), rather than €150 million, with either an EU large undertaking meeting the revised thresholds or an EU branch with €50 million in turnover, rather than €40 million.
- The Commission estimates that the proposal will reduce the number of companies in scope by 80%.
- Limit the information that out-of-scope companies may be required to provide to in-scope companies. For companies that do not fall in scope of the CSRD, the Commission will adopt a voluntary reporting standard, which will act as a shield, by limiting the information that companies or banks falling in scope of the CSRD may request from out-of-scope companies.
- Revisions to the European Sustainability Reporting Standards (ESRS). The Commission will revise the ESRS, with the aim of “clarifying provisions deemed unclear, improving consistency with other pieces of legislation and reducing the number of data points.”
- Eliminate sector-specific standards. The proposed changes would eliminate the directive for the Commission to adopt sector-specific standards.
- Remove the possibility of transition to a reasonable assurance standard. CSRD reporting will be subject only to a limited assurance standard.
- Postpone reporting requirements. Large EU undertakings and SMEs that remain in scope under the revised standards would not be required to report until 2028 (instead of 2026 and 2027, respectively).
Notably, the omnibus package does not change the requirement for companies to conduct a “double materiality” assessment (i.e., how sustainability risks affect their business and how their business impacts people and the environment). There was some speculation that the Commission might move to a single materiality assessment, focusing solely on how sustainability risks affect the company’s business.
If adopted as proposed, the omnibus package would make the following important changes to the CSDDD:
- Postpone the deadline for compliance. The compliance deadline for the first wave of companies in scope of the CSDDD would be postponed one year (from July 26, 2027, to July 26, 2028).
- Limit the scope of adverse impacts assessments. The proposed changes would limit a company’s assessment of adverse impacts to direct business partners and would require an extension of this assessment to indirect business partners only where the company has plausible information that suggests adverse impacts have arisen or may arise there.
- Simplify certain aspects of the due diligence requirements. The proposed changes would extend the interval between required periodic assessments and updates from one year to five years (subject to the requirement to assess and update due diligence measures when there are reasonable grounds to believe that measures are no longer adequate or effective), streamline the stakeholder engagement obligations, and remove the obligation to terminate business relationships as a last-resort measure.
- Limit the information that out-of-scope companies may be required to provide to in-scope companies. Out-of-scope companies would be required to provide only the information specified in the CSRD voluntary sustainability reporting standards, unless the in-scope company requires additional information to carry out the mapping requirement and they are unable to obtain that information in any other reasonable way.
- Revise transition plan requirements. The CSDDD’s requirements around the adoption of transition plans for climate mitigation would be aligned with CSRD requirements.
The proposed omnibus package would also make certain significant changes to the EU Taxonomy, including:
- Introducing a financial materiality threshold for reporting. Only companies in scope of the CSRD with net turnover over €450 million would be required to report. Companies with net turnover up to €450 million would not be required to report but could do so on a voluntary basis.
- Introducing the option to report on activities that are only partially aligned with the EU Taxonomy. This will allow companies that have made progress towards sustainability targets to voluntarily report on their progress.
According to frequently asked questions issued by the Commission, the Commission is also publishing for consultation draft amendments to the Taxonomy Disclosures Delegated Act and the Taxonomy Climate and Environmental Delegated Acts, which would, among other things:
- Simplify the reporting templates (reducing data points by almost 70%)
- Exempt companies from assessing Taxonomy-eligibility and alignment of their economic activities that are not financially material to their business (e.g., those not exceeding 10% of their total turnover, capital expenditure, or total assets)
Next Steps
According to the Commission’s press release, the legislative proposals will now be submitted to the European Parliament and the European Council for their consideration and adoption. The proposed changes to the CSRD and the CSDDD will enter into force once the co-legislators have reached an agreement on the proposals, following publication in the EU Official Journal.
While the announcement has drawn criticism from members of the European Parliament and various green groups, it comes as a relief to many companies struggling to prepare for compliance with these EU regulations.