Omnibus initiative

On February 26, 2025, the European Commission proposed far-reaching changes to key EU sustainability regulations with the Omnibus Package. The aim is to reduce the administrative burden on companies without jeopardizing the EU’s climate policy goals. The reforms include the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU taxonomy and the Carbon Border Adjustment Mechanism (CBAM).

While companies are relieved by relaxed reporting obligations and higher thresholds, critics warn of a weakening of transparency and due diligence obligations. The focus is particularly on the impact on sustainable investments, the responsibility of companies in global supply chains and fair competition within and outside the EU. We have summarized the main proposed changes in this blog post.

A central element of this package is the revision of the Corporate Sustainability Reporting Directive (CSRD) and the postponement of the reporting obligation by two years (“Stop the Clock”). The Corporate Sustainability Reporting Directive (CSRD) is an EU directive that obliges companies to publish detailed information on their sustainability performance. It extends the previous requirements of the Non-Financial Reporting Directive (NFRD) and is intended to create more transparency on environmental, social and governance aspects (ESG criteria).

Update 17.04.2025, “Stop the clock”:

On April 16, 2025, Directive (EU) 2025/794 on the so-called “stop-the-clock” regulation was published in the EU Official Journal. The EU member states must transpose the EU directive into national law by December 31, 2025.

In other words:

• Postponement by 2 years
• For companies required to report from 2025 (wave 2): First report in 2028 for the 2027 financial year
• For companies from third countries, the reporting obligation applies from financial year 2028
• For companies in wave 1 (which must report on the 2024 financial year in 2025 or have been required to report since 2024), the reporting obligation remains in place without postponement. Some of the wave 1 companies will then probably not be required to report from the financial year onwards (depending on the final scope of the reporting obligation)
• Companies in wave 3 (listed SMEs) are not expected to be subject to reporting requirements

“For many companies, the time delay will be less “free space” than expected. It allows the preparations for the first report to proceed “normally” and not with permanent excessive demands,” says Meike Freese from Fährmann Organisationsbegleitung GmbH.

The proposals on content and scope will be adopted in the traditional trilogue procedure (EU Council, EU Commission, EU Parliament incl. consultation periods). A first final ESRS proposal EFRAG is expected to be submitted to the EU Commission by the end of October 2025. The decision on the trilogue results of the EU Commission proposals (scope reporting obligation, ESRS revisions EFRAG) will be made around the end of 2025. Final ESRS standards are expected to be adopted by the EU by mid-2026. Also a new, extended proposal on VSME (possibly earlier).

The task now is to define how to proceed with uncertainty about the content. The reporting obligation remains. What is certain is that there is no “best practice” and no universally valid recommendation. The next steps depend on how far you have progressed as a company and how good you want or need to be.

Significant planned changes to the CSRD:

• Raising the thresholds: In future, only large companies with more than 1,000 employees and either a net turnover of more than €50 million or a balance sheet total of more than €25 million will be obliged to report on sustainability. This means that around 80% of the companies previously required to report will be exempt from this obligation.
• Voluntary reporting for SMEs: Small and medium-sized enterprises (SMEs) can decline to provide sustainability data for larger companies, which reduces their administrative burden.
• Abandonment of sector-specific standards: The originally planned sector-specific European Sustainability Reporting Standards (ESRS) will not be pursued further.

Significant planned changes to the CSDDD:

The Corporate Sustainability Due Diligence Directive (CSDDD) is intended to oblige companies to identify, assess and minimize environmental and human rights risks in their global value chains.

• Limited scope of application: The directive now only applies to large companies above a certain turnover and employee threshold, which means that many medium-sized companies are exempt from the obligation.
• Weakening of due diligence obligations: The requirements for companies to review environmental and human rights risks along the supply chain have been reduced.
• Fewer sanctions: Originally planned strict sanctions for violations have been relaxed so that companies can expect fewer legal consequences.

These adjustments are intended to maintain the competitiveness of European companies and prevent them from being disadvantaged by excessive regulations. However, critics see the danger that the actual effect of the CSDDD will be weakened by the relaxed regulations and that companies will have fewer incentives to actively promote sustainable supply chains.

Significant planned changes to EU taxonomy:

The EU taxonomy is a classification system designed to help investors identify sustainable economic activities. It defines criteria that are used to assess whether an economic activity makes a positive contribution to environmental goals. The latest adjustments to the taxonomy regulations are intended to simplify application and reduce the administrative burden for companies.

• Simplified requirements: Companies must provide less detailed information in order to classify their activities as sustainable.
• More flexible criteria: Certain activities that were previously not considered sustainable can now be classified as eligible.
• Reduced reporting obligations: Companies no longer have to report on their sustainable activities as comprehensively as originally planned.

These changes are intended to facilitate access to sustainable financing and promote investment in green technologies. However, critics fear that the relaxed requirements will facilitate greenwashing, as companies will be subject to less stringent checks and investors will no longer have reliable sustainability criteria.

Significant planned changes Carbon Border Adjustment Mechanism (CBAM)

The Carbon Border Adjustment Mechanism (CBAM) is a key EU climate protection instrument that aims to price CO₂ emissions from imported products and thus ensure fair competition between European companies and international trading partners. CBAM is intended to prevent companies from relocating their production to countries with lower environmental standards (“carbon leakage”) due to stricter climate regulations.

• Simplified reporting obligations: Companies must provide less detailed CO₂ data for their imports during the transition phase (until 2026).
• More flexible proof of emissions: The requirements for proof of emissions from imported products have been relaxed to give companies time to adapt.
• Harmonization with other sustainability requirements: The CBAM reporting obligations will be aligned more closely with the CSRD (Corporate Sustainability Reporting Directive) in order to avoid double reporting.
• Support for affected companies: SMEs and smaller importers receive relief from the administrative requirements.

These measures are intended to significantly reduce the bureaucratic burden on companies while ensuring that the EU remains on track to achieve its decarbonization targets. However, there are also critical voices who fear that transparency and commitment to sustainability could be impaired by the relaxation of reporting obligations. The omnibus package makes it easier for companies to deal with sustainability requirements, but at the same time may lead to a weakening of European sustainability targets. While companies benefit from less administrative burden, transparency and sustainability commitments could suffer.

The Commission’s proposals must now be examined and approved by the European Parliament and the EU Member States before they can enter into force.