A First Hint of the Omnibus Proposal, Simplification or Streamlining?

Introduction

European Commission’s president Von der Leyen announced in her press conference of 8 November 2024 at the Budapest Conference a so-called ‘omnibus proposal’ to simplify the requirements under the Corporate Sustainability Reporting Directive 2022/2464 (CSRD), the Corporate Sustainability Due Diligence Directive 2024/1760 (CSDDD/CS3D), and the EU Taxonomy Regulation 2020/852 (Taxonomy Regulation) with the aim of reducing the administrative burden on companies. On 4 December 2024, the Register of Commission Documents indicated that the Commission expected to be publishing its ‘Omnibus simplification package’, later redefined as: ’Omnibus Package: Chapeau communication and omnibus proposal’ (Omnibus Proposal) on 26 February 2025. 

On 29 January 2025, the Commission published its ‘Competitiveness Compass’ in response to The Draghi report on the Future of EU Competitiveness dated 9 September 2024 and the Report on the Future of the Single Market by Enrico Letta of April 2024. In relation to the Omnibus Proposal, the recent Competitiveness Compass states the following:

“The first Omnibus will, among others, cover a far-reaching simplification in the fields of sustainable finance reporting, sustainability due diligence and taxonomy. In line with the objectives of the sustainable finance framework to mobilise investment in the clean transition, the Commission will ensure better alignment of the requirements with the needs of investors, proportionate timelines, financial metrics that do not discourage investments in smaller companies in transition, and obligations proportionate to the scale of activities of different companies. It will notably address the trickle-down effect to prevent smaller companies along the supply chains from being subjected in practice to excessive reporting requests that were never intended by the legislators.”

Although the Commission initially planned to publish a general approach in a ‘simplification document’ at the end of February, a working draft of this simplification document, entitled “A simpler and faster Europe: Communication in implementation and simplification”, was leaked and published by Politico at the end of January.  In anticipation of the Omnibus Proposal at the end of February, we outline the key aspects of the leaked document, containing the Commission’s proposed approach to regulatory simplification. 

2.        Focus on simplification for SMEs

In broad terms, the Commission proposes a strategy aimed at liberating businesses from futile burdens and overly complex regulations, thereby promoting greater opportunities, innovation, and growth for such enterprises. Specifically, medium-sized companies will be at the centre of attention for this strategic approach. This may result in proposed amendments to the CSRD in order to exempt an estimated 31,000 companies from the detailed and burdensome sustainability reporting obligations by creating a new category of company that falls between ‘large companies’ and small and medium-sized enterprises (SMEs). According to the leaked simplification document this should result in a 35% reduction in reporting requirements for medium-sized companies that currently qualify as large undertakings. Moreover, the EU plans to implement new SME and competitiveness checks to evaluate the impact of new legislation based on multiple criteria, including the effects on SMEs; however, impact on sustainability is not mentioned. 

3.        Hands-on experience through Reality Checks

By reaching out to practitioners in companies (including SMEs), the Commission intends to identify and solve practical issues – i.e. burdens related to authorisations, permitting or compliance, and more. The proposed reality checks will be an important source of information to “verify that the assumptions on which EU legislation is based have in practice materialised to deliver the expected benefits”. As a result, the outcome of the reality checks will assist in evaluating the intended outcomes of the simplification measures for the sustainability regulations, inter alia.

4.        A Simplification Advisory Group

The Commission aims to establish a high-level Simplification Advisory Group (“Group”) which will provide expert and strategic advice to the Commission with regards to its simplification objectives. Specifically, this Group will help to identify priority areas and simplification potential in existing legislation. While sustainability matters may be among the priority areas for the Group, the exact composition and focus of the group remains uncertain at this time.

5.        Concluding remarks

To summarize, the leaked document outlines a general simplification approach in regard to the forthcoming first package of the Omnibus Proposal. It is anticipated that both the official simplification document and the Omnibus Proposal will be released simultaneously. However, at this moment, it is clear that what started as a promise by President of the Commission Ursula von der Leyen, may result in substantive changes to the Green Deal efforts of the EU as a result of pushback from some Member States. In response to the scepticism, the President of the Commission refuted suggestions that the simplification measures would undermine the targets for carbon emissions, stating that: 

We stay the course. The goals are cast in stone”

Curious about the impact of the Omnibus Proposal on the CSRD's reporting requirements? Our experts, Pauline Kuipers and Sander Wagemakers are monitoring the situation closely and are available to answer your questions.