In February 2025, the European Commission (EC) released 2 packages of proposals (Omnibus I & II) with the intention of simplifying rules, reducing the compliance burden, boosting competitiveness and unlocking investment capacity in the EU.
Omnibus I and II would, if adopted, have significant impacts on the EU’s rules in relation to corporate sustainability reporting and due diligence, as well as the EU’s Carbon Border Adjustment Mechanism (CBAM).
Key proposals include:
The Corporate Sustainability Reporting Directive (CSRD)
Postpone its application by two years for large, limited companies (initially required to report as of ‘26) and listed SMEs (initially required to report as of ‘27)
- Reduction in scope (estimated at 80% by the Commission): CSRD currently applies to all large undertakings meeting 2 out of 3 criteria (€50m net turnover, €25m balance sheet total, 250 employees) and listed SMEs. Omnibus proposes to only include large companies with more than 1000 employees (and either €50m net turnover or more than a €25m balance sheet total)
- Proposed amendments to the European Sustainability Reporting Standards and abandoning the development of sector specific standards.
- Removal of the requirement for reasonable assurance of sustainability reports
- Value chain cap: Companies that are no longer in scope of CSRD will be able to limit the information requested by them from entities still in scope.
It’s important to note that under the Omnibus package, non-EU parents (including UK Parents) are still expected to report from FY28, however the net EU turnover is proposed to be increased from €150m to €450m.
The EU Taxonomy Regulation
- Reduction in scope: Currently, EU Taxonomy requirements are consistent with CSRD. The proposed thresholds are amended to make it mandatory only for a subset of large companies with more than 1,000 employees and more than €450m net turnover.
- Simplified reporting: Draft amendments to EU Taxonomy propose to simplify the reporting templates and reduce data points by around 70%, along with exempting companies from assessing taxonomy-eligibility for areas of their business that are not financially material (e.g. <10%).
The Corporate Sustainability Due Diligence Directive (CSDDD)
- Postpone its application by 1 year: Transition deadline to move to 26 July 2027 and the first deadline for the largest companies to comply with sustainability due diligence requirements is also delayed to 26 July 2028
- Limiting Due Diligence: Due diligence requirements to focus mainly on direct business partner. In depth assessments beyond direct business partners only need to be completed where the company has plausible information suggesting there have been or could be adverse impacts arising.
- Reduced impacts on SMEs: Similar to the CSRD change, the Omnibus proposes to reduce the reporting burden on small and medium entities (fewer than 500 employees) in the value chains of larger entities by limiting the amount of information that can be requested by larger entities.
The Carbon Border Adjustment Mechanism (CBAM)
- Introduction of de minimis threshold for small importers at 50 tonnes per type of good per annum. According to the EC, this will exclude 90% of importers currently required to purchase CBAM certificates.
- Delay of the purchase of CBAM certificates: Under the CBAM Regulation, the obligation to pay for emissions on imports of CBAM goods will apply from January 2026. The Proposal does not delay this start date. However, the Proposal provides for a special procedure for 2026 that will delay payment until 2027.
- Simplification for large CBAM importers: There are several steps proposed to make the process easier for large CBAM importers including:
- Making the consultation step in authorisation optional
- Allowing authorised declarants to delegate their CBAM declarations to 3rd parties
- Amending data collection methods for simplification
- Simplifying calculation of emissions, only using direct emissions from electricity
- ‘80% rule’: The omnibus package suggests revising the 80% rule which require importers to hold certificates for 80% of their imports and dropping this down to 50%.
The way forward
It’s important to note that the EC proposals are not final. The EC have submitted the proposal to the two co-legislators – the European Parliament (EP) and the Council of the European Union – for their review, input and adoption. These institutions hold the power to amend the currently proposed Omnibus sustainability package.
To date, the EP and Council have approved the ‘stop the clock’ Directive that seeks to postpone:
- By two years, the entry into application of the CSRD requirements for large companies that have not yet started reporting, as well as listed SMEs.
- By one year, the transposition deadline and the first phase of the application (covering the largest companies) of the CSDDD.
This Directive entered into force on 15 April 2025 and must be transposed by Member States into their national legislation by 31 December 2025. This also allows time for the Council and the EP to agree on substantive changes to the CSRD and CSDDD, which have also been proposed by the Commission as part of the Omnibus I package.
Remaining proposals are expected to be decided upon and adopted towards the end of 2025 or in early 2026, with transposition into EU member state national law within 12 months.
We’re here to help.
As you might have to revisit CSRD scoping, we suggest at a minimum to consider moving forward on climate, particularly preparing your Scope 1, 2 and 3 greenhouse gas emissions inventory and identifying and mitigating climate-related risks.
This is particularly important with reporting under IFRS Sustainability Disclosure Standards from the ISSB on the horizon in the UK and various major jurisdictions outside of the EU.
Our Sustainability team can support with automating your emissions measuring via our Carbon Footprint Finder or support your wider ESG reporting initiatives.
