The EU Omnibus impact on sustainability reporting

The ‘Omnibus’ simplification packages are set to trigger notable changes in corporate sustainability regulations, namely amending the requirements under the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD).

In this article, we summarize the upcoming potential changes affecting businesses in and outside of Europe, as highlighted by Subject Matter Expert for Sustainability & ESG, Paula Galbiatti Silveira, in our recent webinar on Navigating ESG regulations. 

The Omnibus packages explained

The ‘Omnibus’ packages compact key EU proposals to meet the European Commission’s targets for simplifying corporate sustainability obligations. Within this, they also aim to reduce administrative burden on large companies by 25%, and by 35% for small and midsize enterprises (SMEs). 

In January 2025, the European Commission published its Competitiveness Compass, detailing Europe’s plan to boost its economic growth. Following this, the Omnibus I and Omnibus II packages were introduced on 26 February to reduce regulatory and administrative burdens and enhance sustainability reporting requirements.
 

Omnibus I 

The Omnibus I package focuses on simplifying and reducing sustainability reporting obligations under the CSRD and CSDDD. It also includes amendments to the Carbon Adjustment Mechanism (CBAM) to delay its full implementation from 2026 to 2027 to give companies more time to prepare. Thirdly, this package proposes to exempt small importers (those who import 50 tons of CBAM goods per year) from certain obligations.
 

Omnibus II 

The second Omnibus package targets amendments mostly to the InvestEU Regulation, aimed at unlocking financing opportunities for activities in the EU.

Key changes to the CSDDD

The Omnibus packages introduce a number of proposed key changes to the CSDDD, which currently mandates that companies identify and act upon human rights and environmental impacts triggered by their operations and supply chain, and report on due diligence activities. 

The European Commission has proposed significant changes to the existing CSDDD rules:
 

Direct business partners focus 

Under this proposed change, the CSDDD would be limited to direct business partners only, rather than encompassing the whole value chain. Therefore, companies would only be required to conduct risk assessments covering direct suppliers. 

Businesses would only have to carry out full due diligence assessments beyond direct partners If there was plausible information suggesting adverse impacts across its whole value chain. 

Furthermore, companies would no longer be required to terminate business relationships as a last resort following risk assessments and due diligence measures.
 

Monitoring frequency reduction 

The Omnibus packages would also affect the obligation for companies to carry out periodic assessments. 

Currently, businesses subject to the CSDDD must conduct annual assessments. However, if the Omnibus packages are adopted, this obligation would change to every five years instead.
 

Redefining stakeholder engagement 

The definition of ‘stakeholder’ will change to be limited to only those directly affected by the company’s operations, products, and partners. This would reduce the scope of stakeholder engagement obligations moving forward.
 

Climate transition plans removal 

The proposal would remove the obligation for companies to implement climate transition plans. Instead, they would only be required to adopt these plans and, within them, have implementing actions — but the obligation of taking these plans into effect would be removed.
 

Civil liability removal 

Amendments to the CSDDD would potentially remove the provision on EU-wide civil liability. Companies would still have liability, but no obligation under the CSDDD.
 

Delayed transposition deadline 

The final key amendment the Omnibus package proposal is to delay the transposition deadline of the CSDDD from 26 July 2026 to 26 July 2027. Additionally, it would delay the first phase of application to the largest companies from July 2027 to July 2028. 

Key changes to the CSRD

As the Omnibus packages intend to make changes to simplify sustainability reporting and reduce the burden on companies, its proposals would also result in major regulatory changes to the CSRD. 

Currently, the CSRD mandates that companies report on sustainability impacts and financial risks and opportunities. As the CSRD is already in force, 17 Member States have transposed the obligations partly or wholly, in addition to Norway.

If approved, the Omnibus packages would introduce the following changes:
 

Reduced scope 

The scope of the CSRD would be drastically reduced to only apply to large companies with more than 1,000 employees, no longer concerning smaller businesses. This would reduce the CSRD application by a notable 80%.
 

Reporting and value chain cap 

Companies falling outside of the proposed new threshold would still be able to report on sustainability matters, but only voluntarily. As a result, they wouldn’t be able to request information from companies in their value chain who fall outside of the scope of the CSRD — referred to as the ‘value chain cap’ by the proposal.
 

Reduced assurance obligations 

Currently, the CSRD mandates limited assurance of sustainability reports and requests reasonable assurance in the future. The proposal would remove the requirement of reasonable assurance in sustainability reports, so future reports would only be subject to limited assurance.
 

European Sustainability Reporting Standards 

The proposal would simplify the European Sustainability Reporting Standards (ESRS) reporting obligations to remove several datapoints.  

Further, the European Commission’s initial plan to adopt sector-specific ESRS standards in the future would be removed by the Omnibus packages.
 

Deadline delays  

As the CSRD is already in force and the deadline passed, ‘wave 1’ companies are already in the process of publishing their sustainability reports. The Omnibus packages would delay the implementation of the CSRD for ‘wave 2’ and ‘wave 3’ companies by two years (from 2026 and 2027 originally) to await a final decision on this proposal.

What are the next steps?

The Omnibus proposal creates the potential for huge regulatory changes in sustainability reporting requirements and due diligence requirements for countries across Europe. However, as with any proposal, the Omnibus packages must go through a legislative process — considered by the European Parliament as well as the Council of the European Union. 

Additionally, the CSRD and CSDDD are both directives, which means that if the proposal amending their requirements is adopted, they will both need to be transposed into national law to be effective. 

The amendments to these existing reporting and due diligence directives aiming to simplify compliance and reduce burdens may aid businesses in adopting a more streamlined reporting framework, but could also introduce further and stricter regulations on some companies. 

In light of these proposed changes, companies should remain aware of forecasted and revised laws affecting their industry, monitor developments, and rely on a proactive approach rather than a reactive mindset to ensure they can adapt their products, processes, and operations in line with evolving standards. 

Leverage a forward-looking tool like Enhesa Corporate Sustainability’s Sustainability Forecaster solution for expert insight and analysis into upcoming regulatory shifts. By monitoring over 300 sustainability frameworks, Sustainability Forecaster can provide timely updates to help your business stay ahead of ESG trends, proposals, policy changes, guidance, and critical jurisprudence.