Title: The EU Omnibus Regulation: Simplification or New Hurdles for Sustainability Reporting? Resource URL: https://codegaia.io/en/eu-omnibus-regulation-for-sustainability-reporting/ Publication Date: 2025-01-15 Format Type: Blog Post Reading Time: 6 minutes Contributors: Phillip Blumenthal; Source: Code GAIA Keywords: [Sustainability, European Union, Omnibus Regulation, Corporate Sustainability Reporting, ESG Reporting] Job Profiles: Chief Sustainability Officer (CSO);Environmental Consultant;Renewable Energy Manager;Corporate Social Responsibility Manager;Sustainability Manager; Synopsis: This blog features insights from Code Gaia's Head of Sustainability, Phillip Blumenthal, on the European Union's emerging 'Omnibus' regulation concept. This concept aims to simplify sustainability reporting and promises a 25% reduction in obligations. Takeaways: [The Omnibus Regulation’s proposed 25% reduction in reporting obligations risks being a superficial metric rather than a strategic restructuring, as it lacks a clear assessment of which requirements impose the greatest burdens on companies., Without addressing the root issue—how sustainability reporting prioritizes regulatory compliance over impact—businesses may still find themselves entangled in excessive documentation that does little to drive meaningful environmental or social change., The most effective simplifications would require harmonizing the Taxonomy Regulation with ESRS principles and refining supply chain due diligence, yet political and bureaucratic inertia may prevent the EU from making the most impactful cuts., For companies, the real challenge is not just regulatory uncertainty but also the need to proactively shape internal ESG strategies that transcend compliance-driven reporting and focus on value creation., Ultimately, the success of the Omnibus Regulation will depend on whether policymakers recognize that simplification is not about reducing the number of rules but about ensuring that sustainability disclosures serve both corporate decision-making and broader societal goals.] Summary: The European Union is introducing an 'Omnibus' regulation to streamline corporate sustainability reporting by consolidating existing directives. The regulation aims to reduce reporting obligations by 25% by mid-2025, though this target has been met with skepticism due to its seemingly arbitrary nature. The regulation could simplify areas such as the Taxonomy Regulation, supply chain assessments, assurance standards, and sector-specific standards. Companies are advised to continue their current ESG reporting practices, as the content of the ESRS is expected to remain largely unchanged. The Omnibus Regulation has the potential to address overlapping ESG reporting requirements, but true simplification will require prioritizing clarity and practicality. Companies should remain adaptable and proactive, while policymakers should collaborate with the private sector to ensure meaningful sustainability outcomes. Content: ## Summary of the Omnibus Regulation Discussion Last week, we spoke with a sustainability reporting specialist about the European Union’s emerging “Omnibus Regulation” for corporate sustainability reporting. We explored the regulation’s objectives, the feasibility of its 25 percent reduction target, areas ripe for genuine simplification, and strategies companies can adopt amid ongoing uncertainty. The following summary presents the key insights from our conversation. --- ## 1. Defining the Omnibus Regulation The EU’s Omnibus Regulation seeks to harmonize and streamline overlapping sustainability reporting requirements established by three key legal instruments: • The Corporate Sustainability Reporting Directive (CSRD) • The Taxonomy Regulation • The Corporate Sustainability Due Diligence Directive (CSDDD) By mid-2025, the Commission promises to eliminate roughly 25 percent of current obligations, aiming to reduce duplication and clarify reporting pathways for companies. At face value, this consolidation could ease administrative burdens. Yet stakeholders caution that the practical impacts hinge entirely on implementation details that remain unclear. --- ## 2. The 25 Percent Target: Political Signal or Practical Gain? The Commission’s commitment to a 25 percent cut in reporting obligations has drawn healthy skepticism. Observers note the absence of a transparent methodology explaining how the figure was derived. There appears to be no comprehensive analysis identifying which requirements are most onerous or which could be safely removed. Consequently, many view the target as a political statement rather than a carefully calibrated policy objective. Moreover, a simple count of obligations does not equate to a proportional reduction in companies’ workload. Some disclosures take minutes to craft; others demand months of data gathering and stakeholder engagement. Without a nuanced approach to workload measurement, companies could see the number of reported items fall while their actual labor intensity remains unchanged. --- ## 3. Priorities for Effective Simplification Despite uncertainties, there are clear areas where the Omnibus Regulation could deliver meaningful relief. Our consultancy recommends focusing on four key domains: ### 3.1 Taxonomy Regulation The Taxonomy’s detailed technical criteria pose significant challenges. Many firms report zero alignment simply to avoid the proving process. By narrowing the Taxonomy’s scope and better aligning its metrics with CSRD principles, the EU can reduce duplication and make reporting more practical. ### 3.2 Supply Chain Assessments Under the CSDDD, companies must evaluate impacts across multiple supply-chain tiers. Limiting the number of tiers subject to immediate review—or prioritizing assessments based on revenue exposure or materiality—would ease the initial burden without undermining due-diligence objectives. ### 3.3 Assurance Standards Current assurance requirements compel exhaustive documentation of methodologies and uncertainties. Establishing a tailored limited-assurance standard that omits noncritical details would streamline the verification process and reduce anxiety among preparers. ### 3.4 Sector-Specific Standards The ESRS framework includes numerous sector-specific modules. Suspending or deferring the development of additional standards would give companies time to adapt to the core reporting requirements before facing new complexities. --- ## 4. Strategic Responses for Companies In the face of evolving regulations, companies can adopt a proactive stance: • Continue ESRS Implementation. Firms already investing in ESRS compliance should maintain momentum; fundamentals are unlikely to shift dramatically even as regulations converge. • Adopt a Pragmatic Taxonomy Approach. Where possible, report minimally while preserving integrity. This acknowledges the current effort-to-value imbalance without shirking responsibility. • Harmonize Reporting Efforts. Leverage materiality analyses under the ESRS—especially for upstream supply-chain impacts—to satisfy overlapping CSDDD requirements, thereby reducing internal redundancies. --- ## 5. Conclusion: A Balanced Outlook The Omnibus Regulation offers the promise of coherent, streamlined sustainability reporting across the EU. Yet true simplification demands more than an across-the-board 25 percent cut: it requires clear, consistent, and pragmatic standards that advance meaningful sustainability outcomes. Policymakers must collaborate closely with the private sector to ensure reforms bolster both compliance and corporate innovation. In the meantime, companies should remain adaptable, informed, and diligent, recognizing that rigorous sustainability reporting remains central to long-term value creation. --- **About Our Consultancy** We specialize in guiding small and medium-sized enterprises through complex sustainability reporting requirements. Our holistic approach combines step-by-step CSRD support, personalized expert advice, secure AI-enabled workflows, and methodological rigor to deliver compliant, insightful sustainability reports.