EU Omnibus: a step forward or a step back?

On 24^th January 2024 the European Commission announced the Omnibus Simplification Package, aimed at reducing the compliance burden under key sustainability regulations, including the CSRD, CSDDD and EU Taxonomy. This initiative seeks to streamline ESG reporting while maintaining the EU’s sustainability objectives. However, stakeholders are debating whether these changes will enhance efficiency or risk weakening transparency and impact.

Aims of the package

• Reduce reporting obligations—targeting a decrease in the administrative burden of 35% for firms and 25% for SMEs

• Introduce small mid-caps – Introduction of a new category for small mid-cap firms (i.e. bigger than SMEs but smaller than large companies), with requirements more relevant to their size

Competitiveness context

The Omnibus Simplification Package aligns with the EU’s broader Competitiveness Compass (EU Compass to regain competitiveness), announced on 27^th November 2024 and presented on 29^th January 2025, as a strategic framework to enhance the EU’s global competitiveness while securing sustainable prosperity. The framework focuses on three core areas:

1. Closing the innovation gap
2. A joint roadmap for decarbonisation and competitiveness
3. Reducing excessive dependencies and increasing security

These areas are complimented by five horizontal enablers:

1. Simplification
2. Lowering barriers to the Single Market
3. Financing competitiveness
4. Promoting skills & quality jobs
5. Better policy coordination of policies at the EU and national level

Our considerations

Transparency — Will fewer reporting requirements reduce corporate accountability and hinder investor confidence?

Impact — Does reducing the number of data points actually lessen the burden, or does it create new challenges in reporting?

Adaptation — Is another change to the regulatory environment helpful, even if it is to reduce the burden, or does it just add to the uncertainty?

What’s next?

The proposal has received significant backlash since its announcement, including an open letter to the EU signed by major global organisations such as Mars, Primark and Unilever. With the package due to be announced this February 2025, the coming weeks will reveal how these changes may shape in practice and shed some light on whether they are actually a step forward, or a step back.

26th February UPDATE!

At the end of February the European Commission finally published the first draft of its Omnibus package (still to be approved by the European Parliament and the Council before adoption). These are the final amendments:

• Key Changes to the CSRD
  • Scope Reduction – 80% of companies removed from scope
  • Simplified Standards & Reporting Requirements – ESRS to be revised, assurance requirements eliminated
  • Extended Timeline – Reporting requirement postponed by two years
• Key Changes to the CSDDD
  • Extended Timeline – Transposition deadline postponed to 26th July 2027 and commission guidelines to 26th July 2026
  • Less Frequent Due Diligence Assessments – Every five years
  • Climate Transition Plans Aligned with CSRD
• Key Changes to the EU Taxonomy Regulation
  • Scope Reduction & Voluntary Reporting
    • Fewer companies to report Taxonomy alignment due to the CSRD scope reduction
    • EU Taxonomy reporting to be voluntary for companies with fewer than 1,000 employees and a turnover below €450 million EUR
    • Option of reporting partial Taxonomy-alignment for companies invested in transition finance