On 26 February 2025, the European Commission unveiled its Omnibus legislative package, a major initiative to ease and simplify sustainability reporting requirements for European businesses. This Omnibus reform aims to modify three essential European texts: the CSRD Directive (Corporate Sustainability Reporting Directive), The CSDDD (Corporate Sustainability Due Diligence Directive) and The Taxonomy Regulation.
What are the main Commission proposals on CSRD, CSDDD and Taxonomy? Which companies will still be affected by the CSRD? What are the other concrete implications for businesses? How can we effectively prepare for this transformation? How to build a CSR strategy in this period of uncertainty? Decryption in this article.
1. What is the draft EU Omnibus Regulation?
With the CSRD, the CS3D and the green taxonomy, the European Union has multiplied regulations to frame the environmental, social and governance (ESG) reporting of companies. Even if these measures aim to encourage the ecological and social transformation of organizations, they make the reporting process demanding for companies. This is why, faced with the multiplication of reporting requirements and the resulting complexity, the European Commission (EC) has affirmed its desire to alleviate the bureaucratic complexity and administrative constraints weighing on businesses.
It is in this context, and to meet this challenge, that last November, the President of the European Commission, Ursula von der Leyen, announced the establishment of Omnibus legislation. From a legal point of view, it is a legislative text aimed at simplifying, harmonizing or adapting several existing regulations.
This new Omnibus legislation is part of a wider context. As several recent initiatives highlight, the EU wants to strengthen the competitiveness of European businesses by simplifying measures, including those related to sustainability reporting:
- The Draghi Report, commissioned by the EC, advocates the need to have a”Common plan for decarbonization and competitiveness” and recommends regulatory simplification that would avoid”a loss of 10% of the EU's potential GDP.”
- The Budapest Declaration on the New Pact for European Competitiveness of the European Council sets the objective of reducing reporting obligations by at least 25% by mid-2025 (Point no. 4 of the statement)
- “The Compass for Competitiveness”, presented at the end of January 2025 by Ursula Von Der Leyen, reaffirms this priority.
The new legislation under construction aims to harmonize, simplify and clarify the regulatory framework for European ESG reporting.
2. The main changes proposed by the European Commission
2.1 On the CSRD
As part of the Omnibus, here are the main changes to the CSRD requested by the European Commission:
- Postponement of CSRD reporting deadlines : on 16 April 2025, the Stop the Clock proposal was published in the Official Journal of the European Union. It approves the extension of the implementation of reporting requirements for wave 2 and 3 companies by two years.
- Significant reduction in the CSRD scope : the reporting requirements would now only apply to large companies with more than 1,000 employees (and either a turnover of more than 50 million euros, or a balance sheet total of more than 25 million euros). Listed SMEs would no longer be subject to the directive. The number of companies concerned would thus be reduced by around 80%.
- Creation of a voluntary reporting framework : for companies that will no longer be concerned (companies with less than 1000 employees), the Commission will adopt by delegated act a voluntary reporting standard, based on The VSME developed by EFRAG.
- Value chain cap : only information from the voluntary reporting framework may be requested by companies concerned by the CSRD and wishing to obtain information from their companies in their value chain with less than 1,000 employees.
- Simplifying ESRS standards : the Commission wants to review European reporting standards, ESRS, in order to significantly reduce the number of data points required and to clarify reporting requirements.
- Relaxation of CSRD insurance requirements : the Commission wants to remove the possibility of moving from a limited insurance requirement to a reasonable insurance requirement.
- Abandonment of sectoral standards
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2.2 On the CSDDD
- Postponement of transposition and application : the Stop the Clock proposal published in the Official Journal on 16 April 2025 extends the deadline for transposition and the first phase of application of the CSDDD by one year. The latter will start in July 2028.
- Easing due diligence obligations : Businesses would no longer be required to conduct detailed assessments of potential negative impacts in complex value chains involving indirect business partners, unless there was credible evidence. In other words, only tier 1 suppliers would be affected.
- Elimination of the obligation to end commercial relationships : The new text would allow businesses to simply suspend a problematic business relationship rather than end it permanently.
- Strengthened protection for SMEs : large companies will have to limit their requests for information to SMEs to what is specified in the voluntary reporting standards.
- The requirements foradoption of transition plans for climate mitigation would be aligned with the CSRD.
- The principle of corporate liability would be maintained but the obligation for all Member States to put in place a civil liability regime associated with due diligence would be abolished.
2.3 On the Taxonomy Regulation
- New perimeter : only companies with more than 1000 employees and with a turnover of more than 450 million euros would be affected.
- Businesses would no longer be required to assess the eligibility and alignment with the Taxonomy of their economic activities that are not financially significant for their business, i.e. a financial materiality threshold.
- The criteria for “Do not cause significant harm” (DNHS) concerning pollution prevention and control related to the use and presence of chemicals would be simplified.
- Simplifying reporting requirements : reporting models would be simplified with a reduction in data points of around 70%.
- Partial alignment : businesses could choose to voluntarily declare their “partial alignment” with the Taxonomy in order to demonstrate their efforts toward full alignment.
For a complete deciphering of the Omnibus announcements, watch the webinar organized with the French MEP, Pascal Canfin
3. What strategy should businesses adopt after the Omnibus ads?
While waiting for the final vote on the texts, how to build or how to continue to structure your CSR strategy to be as effective as possible? Why should we continue to invest in these subjects despite the high uncertainty?
After the European Commission's announcements on 26 February, we published a guide to support you in your CSR strategy.
There you will find:
- a summary of the main changes proposed in the Omnibus legislation
- What strategy for companies with more than 1000 employees?
- What strategy for companies with less than 1000 employees?
- What are the essential actions, regulatory or not, to be put in place?
- competitive advantage, access to finance... All the reasons to continue to invest in its CSR strategy
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