On 26 February 2025, the European Commission published the first “omnibus” package aimed at simplifying EU sustainability reporting requirements related to the EU Green Deal. The package includes proposals related to the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), the Carbon Border Adjustment Mechanism (CBAM), along with amendments to the EU Taxonomy regulation, and adjustments to InvestEU and other EU investment programmes.
The Omnibus proposal seeks to eliminate redundancies and create a more efficient reporting system, strengthening EU’s competitiveness, in accordance with the Draghi Report.
The Commission has set the explicit goal: reducing the reporting burdens by 25% for large companies and 35% for small and medium-sized enterprises (SMEs).
Proposal’s effects on EU Taxonomy
The Omnibus proposal will introduce multiple modifications to the EU taxonomy regulation.
It will allow companies with annual turnover below € 450 million to voluntarily report their progress towards sustainability goals. It will also permit them to report on activities that meet some, but not all, of the Taxonomy’s technical criteria. The proposal also introduces more flexibility in how companies report their alignment with the Taxonomy, reducing the administrative burden. The proposal will also remove certain detailed requirements. For example, it introduces a combined approach for reporting on DNSH (Do No Significant Harm) and nuclear/fossil gas activities, reducing complexity. Finally, one of the proposed changes is to exempt companies with less than 1000 employees or those with an annual turnover below € 450 million from reporting requirements altogether.
Proposal’s effects on CSRD
The proposal suggests a revision of the first set of European Sustainability Reporting Standards, removing some elements deemed less relevant to general sustainability reporting. Furthermore, under the proposal, the Commission would adopt delegated acts to provide sustainability reporting standards for companies outside the scope of the CSRD, allowing them to report on a voluntary basis.
Companies will not be required to obtain information from other businesses in their value chain with less than 1000 employees, provided they voluntarily report.
The proposal will delay the start of sustainability reporting until 1 January 2028 for companies in wave 2 (large companies), and wave 3 (SMEs). Providing them additional time to prepare their reports.
Proposal’s effects on CSDDD
The proposal aims to extend the scope of maximum harmonization and legal clarity across Member States. It simplifies the definition of “stakeholder”, focusing on workers, their representatives, individuals and communities directly affected by the companies.
It also proposes the removal of implementation of a transition plan for climate change mitigation. The proposal will introduce a new standardized approach to penalties, guaranteeing a fair and consistent application of fines across the Union.
Also, the deadline for issuing guidelines on due diligence procedures will be extended, allowing businesses more time to understand and comply with the new requirements.
Finally, the proposal will narrow the scope of due diligence by focusing on direct suppliers and business partners. This means companies are now responsible for assessing and addressing any adverse impacts within their own operations and direct relationships, rather than further down their value supply chain.
Proposal’s effects on CBAM
In addition, the new proposal is aimed at simplifying the Carbon Border Adjustment Mechanism by introducing a de minimis threshold for small importers and implications for large CBAM importers.
The former will allow small importers (fewer than 50 tons annually in key sectors) to be exempted from CBAM obligations. The latter will instead introduce several adjustments to ease the process for large CBAM importers. These measures will adjust data collection methods to simplify compliance, consider only direct emissions from electricity use in CBAM calculations, and align annual deadlines for various CBAM activities to simplify the process.
Moreover, the proposal will allow first-year flexibility by not requiring companies to purchase CBAM certificates by the end of 2026.
Lastly, the proposal suggests a revision of the 80% rule to a 50% rule for CBAM certificate management. This will permit importers to hold certificates only for 50% of their carbon emissions.
Focus on SMEs
CSRD regulations have had a negative impact on non-listed SMEs, causing them to have to comply with disproportionate rules which many do not even have the capacity for. The CSRD mainly applies to large companies, but it indirectly affects SMEs in supply chains that must provide sustainability data to larger firms. The omnibus proposal aims to remove excessive reporting for smaller businesses, adopting a voluntary standard to supply sustainability information. This will favour a more business-friendly environment, encouraging new businesses and partnerships to be developed. This, in turn, will enable businesses to grow and create jobs, attract investments, and get the necessary funds for their transition towards a more sustainable economy, helping the EU meet the Green Deal’s ambitious objectives.
Timeline of the proposal
The European Commission published the Omnibus Simplification Package proposal on February 26, 2025. If adopted, it will introduce several adjustments to sustainability reporting timelines, easing compliance pressure on businesses. The start of CSRD reporting for large companies (Wave 2) and SMEs (Wave 3) will be postponed until January 1, 2028, giving them more time to prepare. CBAM compliance will be adjusted by delaying the first mandatory purchase of CBAM certificates until the end of 2026 and streamlining annual reporting deadlines. These changes reflect the EU’s goal of balancing regulatory ambition with economic feasibility. The proposal’s final form will depend on negotiations between the European Parliament and the Council, which may introduce further modifications before adoption. As these discussions unfold, businesses will need to stay informed and proactive in preparing for the eventual regulatory landscape, ensuring a smooth transition when the new rules take effect.
Written by Mario Di Salvo and Riccardo Pinna
References
- https://commission.europa.eu/news/commission-proposes-cut-red-tape-and-simplify-business-environment-2025-02-26_en
- https://viewpoint.pwc.com/dt/gx/en/pwc/in_briefs/in_briefs_INT/in_briefs_INT/european-commission-publishes-omnibus-proposals.html
- https://normative.io/insight/the-omnibus-simplification-package-explained/
