The European Commission has unveiled its first “Omnibus” package, a sweeping set of reforms aimed at reducing sustainability reporting obligations for companies. The most significant of these changes is a drastic reduction in the number of companies required to comply with the Corporate Sustainability Reporting Directive (CSRD), effectively removing 80% of businesses from its scope. This move is part of a broader effort to cut administrative burdens and enhance Europe's global competitiveness.
The CSRD, which came into effect in early 2024, mandated detailed sustainability reporting for large companies, with a phased rollout for smaller businesses over the following years. However, under the proposed revisions, only companies with over 1,000 employees and revenues exceeding €50 million or assets above €25 million will need to comply. This change significantly reduces the reporting obligations for mid-sized firms. For smaller companies, sustainability reporting will now be voluntary, following newly introduced Voluntary Standards for SMEs (VSME). These standards will also limit the extent of sustainability-related data that larger firms and banks can request from smaller businesses within their supply chains.
Beyond the CSRD, the Omnibus package also introduces changes to other key sustainability regulations, including the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy, and the Carbon Border Adjustment Mechanism (CBAM). The CSDDD, which obligates companies to assess and mitigate their environmental and social impacts, will now see its implementation delayed by a year to 2028 for large businesses. Furthermore, due diligence obligations will primarily focus on direct business partners unless evidence suggests broader issues down the supply chain. The frequency of due diligence monitoring will also be reduced, easing compliance costs.
The EU Taxonomy, which classifies economic activities based on their environmental impact to guide sustainable investments, is also undergoing substantial revisions. The new proposal raises the mandatory reporting threshold to companies with revenues above €450 million, while smaller firms will only need to comply voluntarily. Reporting requirements will be further simplified, with the number of data points required cut by nearly 70%. Additionally, companies will no longer need to assess Taxonomy alignment for economic activities that are not financially material to their business.
Changes to CBAM, the EU’s carbon tax on imports, are equally significant. A new threshold will remove approximately 90% of importers from its regulatory scope, effectively reducing the number of companies required to comply from around 200,000 to just 18,000. Despite this exemption, the Commission asserts that more than 99% of emissions will still be covered under the system. The proposals also streamline reporting and emissions calculation requirements for affected businesses.
While these reforms aim to relieve administrative pressure on businesses, the Commission has chosen to maintain the CSRD’s double materiality approach. This means companies will still need to report not only on how sustainability issues impact their operations but also on how their activities affect the environment and society.
The proposals must now be approved by the European Council and Parliament, with the Commission urging swift action to implement these changes. If enacted, the Omnibus package will significantly alter the EU’s sustainability reporting landscape, reducing compliance burdens while maintaining key environmental and social accountability measures.
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