Navigating the Omnibus Package: Key updates and what it means for businesses

Corporate Sustainability Reporting Directive (CSRD)

• Scope Reduction – The number of companies required to report under CSRD will decrease by 80%, now covering only those with 1,000+ employees and either €50M turnover or €25M in total assets. Listed SMEs will no longer be required to comply.
• Lower Reporting Complexity – Sector-specific reporting requirements are eliminated, and mandatory disclosure data points will be reduced by two-thirds.
• Delayed Compliance Deadlines – Large undertakings and listed SMEs that have not yet implemented CSRD now have until 2028 instead of 2026.
• Double Materiality Maintained – The principle of double materiality remains intact, ensuring companies continue assessing both financial and environmental impacts.
• No Upgrade to Assurance Requirements – Plans to transition from limited to reasonable assurance by 2028 have been removed, keeping the current limited assurance approach.

Corporate Sustainability Due Diligence Directive (CSDDD)

• Focus on Direct Suppliers – Companies are no longer required to assess all indirect suppliers, unless clear evidence of risks exists.
• Extended Due Diligence Review Periods – Companies will now conduct due diligence assessments every five years instead of annually.
• Protection for SMEs – Direct business partners with fewer than 500 employees cannot be required to provide detailed sustainability data unless voluntarily opting in.
• Narrowed Stakeholder Engagement – Businesses now need to engage only with directly affected stakeholders, simplifying engagement requirements.
• Enforcement Deferred to Member States – The harmonized EU-wide liability framework has been removed, allowing each country to set its own legal enforcement approach.

EU Taxonomy

• Reduced Scope for Mandatory Taxonomy Reporting – Only companies with more than 1,000 employees and €450M+ turnover will be required to report in accordance with EU Taxonomy. Others may opt in voluntarily.
• Simplified Disclosure Requirements – The number of required disclosure tables will be reduced by two-thirds for non-financial entities and further simplified for financial institutions.
• Materiality Threshold Introduced – Companies will no longer need to assess Taxonomy eligibility if the activity accounts for ≤10% of their turnover, CapEx, or total assets.
• Voluntary OpEx Reporting – Companies may opt-in for operational expenditure (OpEx) reporting, further reducing the compliance burden.

Carbon Border Adjustment Mechanism (CBAM)

• Exemptions for Small Importers – Companies importing less than 50 tonnes per year (~80 tonnes CO₂ equivalent) will be exempt from CBAM obligations.
• Delayed Full Implementation – The final phase of CBAM will be postponed until 2027, allowing businesses more time to adapt.
• Simplified Carbon Certificate Requirements – Importers must now hold certificates covering only 50% of their reported emissions, down from the previous 80% requirement.
• Streamlined Reporting & Compliance – Companies can delegate CBAM declarations to third parties, reducing administrative burdens.

While the Omnibus Proposal refines compliance requirements, businesses should continue prioritizing sustainability as a long-term strategy. Climate change remains a key driver of business resilience and competitiveness. Here’s what companies should do:

• Continue Investing in Sustainability – Sustainability is a long-term business driver, not just a compliance task. Investing in decarbonization, energy efficiency, and sustainable supply chains will enhance competitiveness, reduce costs, and meet stakeholder expectations.
• Maintain Current Reporting Practices – Even with reduced regulatory requirements, sustainability data remains critical for investors, customers, and business partners. Companies should continue tracking and disclosing key metrics to stay ahead of future reporting needs.
• Monitor Legislative Developments – The Omnibus Proposal is still under review, and further changes may come. Businesses should stay updated and be prepared to adapt sustainability strategies as regulations evolve.
• Invest in Transparency & Stakeholder Engagement – Sustainability reporting is more than compliance—it’s a tool for strengthening brand reputation and building trust. Clear, data-driven communication with investors, customers, and regulators will remain essential.
• Leverage Sustainability for Cost Reduction – Sustainability initiatives don’t just benefit the planet—they improve efficiency and cut costs. Optimizing energy use, waste management, and logistics can create financial savings while enhancing sustainability performance.

The EU Omnibus Proposal is progressing through the legislative process, but its final approval and national transposition could take time. To prevent companies from having to comply with existing CSRD, CSDDD, and EU Taxonomy rules before the new Omnibus adjustments take effect, the EU has introduced a ‘stop-the-clock’ Directive. This would delay CSRD and Taxonomy reporting by two years and CSDDD implementation by one year. While the proposal has broad support, EU directives typically take years for full approval and implementation - CSRD, for instance, took over two years.

If the pause is not finalized by the end of 2025, companies in Wave 2 (large undertakings) may still need to report for the 2026 cycle. This uncertainty is especially relevant for non-EU companies with in-scope EU subsidiaries, as they may still need to meet 2025 reporting obligations under existing rules.

Businesses should remain proactive, monitor legislative developments, and align sustainability strategies with the evolving regulatory landscape to ensure compliance and long-term value creation.