Omnibus I – Simplifying or overhauling the EU’s Sustainability Regime?

After months of anticipation and leaks to the press, the new European Commission presented its so-called Omnibus I Proposal for simplifying and easing the ESG reporting obligations on 26 February 2025. 

The Omnibus I Proposal encompasses a 2-track approach by providing two separate legal proposals for two amending both CSRD and CSDDD. 

It is important to note that these legislative proposals still need to be adopted (and can be amended) by the European Parliament and the European Council.

The First Proposal (COM/2025/80 final) aims to postpone the reporting requirements of the existing CSRD for the 2nd and 3rd cohorts by two years (i.e. 1 January 2027 for non-listed ‘large undertakings/groups’ and 1 January 2028 for listed SMEs etc.) and the transposition date of the CSDDD with one year (i.e. to 26 July 2027). Given this technical change, the Commission proposes that Member States should transpose this amending Directive into national law before 31 December 2025. It calls on the EU Council and Parliament to adopt this proposal as soon as possible to prevent uncertainty for companies that are currently preparing for CSRD compliance over the current financial year. In parallel, the Commission promises to adopt without delay a delegated act to revise the first set of ESRS, reducing the number of data points and clarifying which are mandatory or voluntary reporting topics.

The Second Proposal (COM/2025/ 81 final) contains more material changes to the CSRD and CSDDD. There is no timeline indicated, as it is likely that this Directive will not so easily obtain the approval of both EU institutions. The following proposed changes by the Second Proposal materially affect the reporting obligations for most companies currently already preparing for CSRD reporting:

CSRD

• Reducing the remit of CSRD for non-listed EU companies by 80% as a result of amending the application threshold to large undertakings having at least 1.000 employees, and turnover of > EUR 50 million or total assets of > EUR 25 million
• Removing the requirement to obtain ‘reasonable assurance' on sustainability statements but ‘limited assurance’ to remain. Commission shall issue targeted assurance guidelines by 2026 that clarify the necessary procedure that assurance providers are to perform as part of their limited assurance engagement before adopting the standards by delegated act
• With regard to for non-EU ultimate parent companies, the Commission proposes increasing the net turnover threshold generated in the EU from EUR 150 million to 450 million as well as aligning the net turnover threshold of branches with the net turnover threshold for ‘large undertakings’ (i.e. EUR 50 million)
• Removing the requirement to adopt Sector Specific ESRS and revising the General ESRS

CSDDD

• Climate change transition plans do not have to be ‘put into effect'
• Primary due diligence obligations relate only to ‘direct business partners’
• Penalties are no longer linked to worldwide net turnover 
• Member States cannot impose further requirements relating to the due diligence process due to maximum harmonization
• Removal EU-wide civil liability

EU Taxonomy 

• Newly introduced thresholds provide for reduced applicability of EU Taxonomy’s disclosure obligations in terms of capital expenditures

With these proposals, the Commission aims to cut sustainability reporting and due diligence requirements for 80% of the companies currently in scope. One may wonder whether this reduced remit does not dilute the Commission’s green ambitions. Also, in this digital age, the number of employees does not necessarily reflect a company’s impact on sustainability. It will be interesting to see how the EU institutions will also respond to the calls for simplified and clear sustainability reporting and due diligence without watering down the core objectives of CSRD and CSDDD.

Furthermore, although the Commission aims to “cut the red tape”, the chosen 2-track approach could result in additional complexity for businesses as it remains to be seen whether the Second Proposal will also be adopted by the other EU institutions, where it will no doubt be heavily debated and amended. Especially for ‘large undertakings’ that have less than 1000 employees, two years of additional uncertainty lie ahead. Most companies have already embarked on the road to CSRD compliance by conducting the ‘double materiality assessment’ (DMA), gap analysis and data collection for their reporting requirements. This investment may no longer be required for a mandatory reporting obligation, but hopefully many will have experienced that the CSRD process also enhances business opportunities as well as risk mitigation and resilience.

Stay tuned as our experts Pauline Kuipers, Michael Junemann, Felix Schmidtke, Timo Förster, and Sander Wagemakers will provide a more detailed analysis of the Omnibus I Proposals. In the meantime, do not hesitate to reach out if you have any questions.