Title: EU Omnibus Update: EU Commission Proposes to Streamline Corporate Sustainability Rules
Resource URL: https://www.erm.com/insights/eu-omnibus-update-eu-commission-proposes-to-streamline-corporate-sustainability-rules/
Publication Date: 2025-02-27
Format Type: Blog Post
Reading Time: 4 minutes
Contributors: Jennifer Klie;Alexandra Guaqueta;Johann Weicht;Laurent Beuselinck;
Source: ERM (Environmental Resources Management)
Keywords: [Corporate Sustainability, Regulatory Compliance, CSRD, CSDDD, EU Taxonomy]
Job Profiles: Chief Sustainability Officer (CSO);Environmental Consultant;Renewable Energy Manager;Corporate Social Responsibility Manager;Business Consultant;
Synopsis: In this blog post, ERM experts Laurent Beuselinck, Johann Weicht, Alexandra Guaqueta, and Jennifer Klie outline the EU Omnibus proposal, which simplifies corporate sustainability compliance by reducing reporting burdens and narrowing the scope of CSRD, CSDDD, and the EU Taxonomy.
Takeaways: [The Omnibus proposal extends compliance deadlines and reduces reporting requirements under CSRD, CSDDD, and the EU Taxonomy., The number of companies required to report under CSRD and the EU Taxonomy will decrease by approximately 80%., Companies will need to report fewer data points, making sustainability reporting clearer and more comparable., Supply chain due diligence will be less stringent, with a reduced focus on indirect suppliers., The proposal lowers enforcement mechanisms and assurance requirements, easing compliance burdens for companies.]
Summary: The European Commission’s Omnibus proposal aims to simplify corporate sustainability compliance and reduce regulatory complexity. Key changes include extended compliance deadlines, a reduced number of reporting companies, and fewer mandatory data points for sustainability disclosures. The CSRD’s scope will shrink by 80%, meaning fewer companies will be required to report. The EU Taxonomy’s reporting requirements will also be reduced, with data points cut by two-thirds.

CSDDD modifications focus on reducing due diligence burdens, particularly for indirect suppliers. Large suppliers will remain accountable, but smaller suppliers will be shielded from excessive compliance demands. CBAM, the EU’s carbon border tax, will exempt companies importing less than 50 metric tons per year, significantly reducing the number of affected businesses while maintaining coverage for 99% of emissions.

The proposal also shifts the emphasis toward voluntary reporting for companies left outside the revised regulatory scope. The European Commission plans to introduce a simplified voluntary reporting standard. Assurance and enforcement mechanisms will be weakened, eliminating plans to upgrade CSRD’s assurance requirement from limited to reasonable assurance. Companies will also face reduced litigation risks under CSDDD.

The proposal must still be approved by the European Parliament and Council before being transposed into national laws. If adopted, it will streamline sustainability compliance, reduce regulatory burdens, and encourage voluntary reporting as a strategic tool for business resilience.
Content: ## Introduction

The European Commission has unveiled its comprehensive Omnibus package, designed to streamline and simplify the EU’s corporate sustainability framework. This proposal revises three core regulations—the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy Regulation—while also adjusting the Carbon Border Adjustment Mechanism (CBAM). These measures aim to enhance European competitiveness by reducing regulatory complexity and compliance burdens without diluting the Union’s commitment to sustainability and decarbonization.

Concurrently, the Commission introduced the Clean Industrial Deal, which seeks to accelerate clean‐energy adoption in energy‐intensive sectors through the creation of an Industrial Decarbonization Bank endowed with €100 billion and by relaxing state‐aid rules for clean‐energy projects.

## Key Changes in the Omnibus Package

The Omnibus proposal, if ratified by the European Parliament and the Council and transposed into national law, will reshape the EU’s sustainability regulatory ecosystem. Its principal reforms include:

### 1. Extended Compliance Timelines

Most organisations will receive additional time to prepare for CSRD, Taxonomy and CSDDD obligations, affording them greater flexibility in implementing new reporting systems and due‐diligence procedures.

### 2. Reduced Scope of Mandatory Reporting

• The total number of companies subject to CSRD obligations will fall by approximately 80 percent relative to the original directive’s intention.
• Fewer entities will be required to disclose EU Taxonomy alignment metrics.
• CBAM will apply to a narrower cohort of importers, excluding those whose annual imports amount to less than 50 metric tons.

### 3. Streamlined Data Requirements

• The volume of data points demanded under the CSRD will be significantly curtailed, with clearer definitions to ensure consistency and comparability.
• EU Taxonomy reporting obligations will decline by two‐thirds, focusing on essential technical and financial metrics.

### 4. More Targeted Supply Chain Due Diligence

Under the revised CSDDD provisions, companies will have limited authority to seek information from smaller, direct suppliers. Indirect suppliers will not be subject to scrutiny unless credible evidence indicates potential harm.

### 5. Adjusted Assurance and Enforcement Provisions

• The proposal abandons plans to elevate CSRD assurance from “limited” to “reasonable.”
• CSDDD litigation exposure will be reduced, particularly regarding suppliers’ corrective‐action commitments.

### 6. Enhanced Role for Voluntary Reporting

Entities falling outside the narrowed CSRD and Taxonomy scope are encouraged to adopt a forthcoming simplified voluntary reporting standard, underscoring the Commission’s emphasis on transparency beyond mandatory frameworks.

### 7. Safeguards for Smaller Enterprises

A new “value‐chain cap” will protect small and medium‐sized enterprises from onerous reporting demands and from responding to extensive data requests by larger compliance‐scope companies.

## Specific Amendments by Regulation

### Corporate Sustainability Reporting Directive (CSRD)

The Omnibus proposal makes the most substantial alterations to the CSRD:

• Significantly fewer companies will be in scope.
• Data‐disclosure requirements will be streamlined to focus on material, decision-useful information.
• Deadlines for first‐time reporters will be extended to accommodate system upgrades and stakeholder alignment.

### Corporate Sustainability Due Diligence Directive (CSDDD)

The revised CSDDD shifts due‐diligence obligations toward large suppliers and direct business partners. By narrowing the investigative remit, the proposal alleviates compliance burdens for both reporting companies and smaller suppliers down the value chain.

### EU Taxonomy Regulation

CSRD-regulated entities with more than 1,000 employees and at least €450 million in annual turnover will continue to report Taxonomy alignment. Draft amendments to the Taxonomy Regulation are open for public consultation, focusing on sectoral criteria and data templates.

### Carbon Border Adjustment Mechanism (CBAM)

CBAM’s scope will shrink significantly by exempting importers whose annual carbon‐intensive imports fall below 50 metric tons. According to the Commission, this adjustment will remove 90 percent of current reporting entities while still covering 99 percent of emissions imports.

## Implementation and Next Steps

For the Omnibus reforms to take effect, the European Parliament and Council must adopt the proposal and member states must transpose the changes into national law. The Commission has indicated a willingness to fast‐track this legislative process to provide clear compliance guidelines promptly. Upon adoption, companies can transition from viewing sustainability reporting as a mere compliance exercise toward leveraging it strategically to strengthen market positioning and resilience. Voluntary reporting will assume a more prominent role, particularly for organisations outside the refined mandatory scope.

The regulatory landscape will continue to evolve, and environmental‐risk management (ERM) will offer detailed analysis, sector-specific recommendations and expert insights through forthcoming webinars and policy briefings.