Sustainability is giving way to competitiveness. What changes to ESG reporting does the omnibus propose?

On 26 February 2025, the European Commission presented a package of proposals known as the Omnibus, which aims to simplify existing rules on ESG (Environmental, Social, and Governance) reporting and reduce the administrative burden on businesses. The main proposed changes include:

1. Narrowing the range of obliged entities for CSRD

• Increase in the threshold for mandatory reporting: The obligation to report on sustainability would now only apply to large companies with more than 1,000 employees that meet at least one of the financial criteria:
• Annual turnover of more than EUR 50 million, and/or
• Balance sheet total over EUR 25 million.

This measure reduces the number of companies subject to the CSRD by about 80%.

• Deferred implementation for smaller businesses:
  • Wave 2: Large companies with more than 1,000 employees were originally supposed to report for 2025 in 2026, but will now report for 2027 in 2028.
  • Wave 3: Listed small and medium-sized enterprises (SMEs) were originally due to report for 2026 in 2027, but will now report for 2028 in 2029.
• Limited ability of the European Commission to adopt sectoral standards and require extended reasonable assurance.
• Restrictions on required information in supply chains for businesses that will no longer be
  within the scope of the CSRD.

2. Simplification of EU Taxonomy reporting requirements

• The reporting obligation under the EU Taxonomy would be limited to the largest companies with more than 1,000 employees and a turnover of more than EUR 450 million.
• Introduction of a financial materiality threshold for taxonomy reporting.
• A new concept of partially aligned activities with taxonomy to support a gradual transition.
• Reducing the number of mandatory reporting templates and the number of reportable data points.
• Simplification of the “Do No Significant Harm” (DNSH) criteria, especially in the area of pollution prevention.
• Adjustment of the Green Asset Ratio (GAR) calculation for financial institutions.

3. Supply chain due diligence adjustments (CSDDD)

• Due diligence obligation only in relation to direct suppliers, not the entire supply chain.
• Reduction of the frequency of supply chain assessments from annually to once every five years.
• Delay the start of the CSDDD requirements to 26 July 2027, with the first phase of implementation from 26 July 2028. ​
• Reduction of the information burden on SMEs in the value chains of large enterprises.
• Greater harmonisation of due diligence requirements in the EU.
• Alignment of requirements for climate action plans with CSRD.

4. Changes to the carbon border adjustment mechanism (CBAM)

• Increase in the threshold for importers: CBAM would only apply to companies importing goods weighing more than 50 metric tons per year.

The number of affected importers is estimated to decrease from approximately 200,000 to 18,000.

These proposals are part of broader efforts of the European Commission to increase the competitiveness of European businesses and reduce administrative burden. It is estimated that the implementation of these measures will lead to savings of up to EUR 40 billion. The proposals now await approval by the European Parliament and EU Member States. The European Commission has also opened a public consultation on the proposed changes to the EU Taxonomy with a deadline for comments until 26 March 2025.