EU Omnibus announcement: key changes to corporate sustainability reporting
On February 26, 2025, the European Commission unveiled the Omnibus package, a series of proposals aimed at simplifying EU regulations to enhance business competitiveness. A significant aspect of this package involves modifications to the Corporate Sustainability Reporting Directive (CSRD), which have substantial implications for businesses across Europe.
What are the Key Changes?
- Fewer companies required to report – from 50,000 to <7,000.
- Due diligence limited to direct suppliers, removing indirect supplier obligations.
- Sector-specific sustainability reporting may be scrapped or delayed.
- No penalties for non-compliance (previously up to 5% of turnover).
These changes aim to reduce corporate red tape but raise serious concerns for climate and environmental goals.
What changes for CSRD?
The proposed changes focus on narrowing the scope of companies required to comply with CSRD reporting obligations:
- Reporting Requirements Shrink
- Thresholds rise to >1,000 employees (previously 250+) and €450m turnover (previously €50m).
- No obligation to collect data from non-CSRD suppliers.
- Sector-specific standards may be scrapped, reducing comparability.
- Deadlines may be delayed by up to two years.
The table below outlines the current versus proposed parameters for CSRD, CSDDD and EU Taxonomy:
What does this mean for ESG and sustainability in business?
The key impact for sustainability in the EU
- The changes potentially remove around 80% of companies from the scope of CSRD, focusing the sustainability reporting obligations on the largest companies which are more likely to have the biggest impacts on people and the environment
- It would ensure that sustainability reporting requirements on large companies do not burden smaller companies in their value chains
- The Commission has a clear target to deliver an unprecedented simplification effort, by achieving at least 25% reduction in administrative burdens, and at least 35% for SMEs until the end of this mandate
- It would also postpone by two years (until 2028) the reporting requirements for companies currently in the scope of CSRD and which are required to report as of 2026 or 2027.
- If adopted and implemented as set out today, the proposals are conservatively estimated to bring total savings in annual administrative costs of around €6.3 billion and to mobilise additional public and private investment capacity of €50 billion to support policy priorities
The full EU Omnibus proposal is found here with the Q&A also linked in this article: https://commission.europa.eu/news/commission-proposes-cut-red-tape-and-simplify-business-environment-2025-02-26_en
What does this mean for your business?
Whilst the Omnibus was released this week (26 February 2025), nothing changes overnight. Businesses may be tempted to alter their course, believing that everything is changing, but that is not the case. Business actions should be determined by overall strategy to date and the primary motivations behind that strategy. Let’s consider some key factors:
Timing is critical
The CSRD has already been been passed in national laws in many EU countries, so companies are currently legally required to comply with CSRD. There is no suggestion of suspension or pause in these obligations.
The EU Omnibus proposal will need to pass 6 formal steps of review and approval as part of any EU legislative process. The announcement this week is only step 1 of the process. If it follows recent legislative timelines, it could easily be several years before it is enacted.
Reporting for ‘so called Wave 2’ companies proposes to be delayed until 2028, which means the Omnibus would need to be passed into law within the next 10 months, for that deadline to change anything for Wave 2 companies in the short-term. By comparison, it took the Commission 25 months to deliver CSRD in to law.
Whilst there is a stated ambition to fast-track decisions on certain Omnibus provisions, accelerating the legislative process by more than twice the historic speed seems rather unlikely.
So, companies that choose to pause or delay their CSRD preparations in anticipation of the Omnibus changes would be taking a significant risk. If the proposal is not made law by December 2025, Wave 2 companies would still need to report by January 2026.
Remember the true value of CSRD
Many companies understand that CSRD is a strategic tool, some even choosing to comply voluntarily, seeing CSRD as a gold standard in sustainability reporting – such is the respect and value for the ESRS framework.
For example, currently mandatory under CSRD, double materiality assessments are crucial for long-term sustainability and strategic ESG planning, irrespective of legislative compliance.
It is widely believed that few other frameworks offer the same strategic insight. With or without the demand for legislative compliance, employing CSRD gives all businesses a methodology to future-proof, focusing on value chain analysis, impacts, risks and opportunities, policies, actions, metrics, and targets.
If implemented, the Omnibus ultimately simplifies and streamlines this opportunity. It eases the path for businesses already on course to CSRD. And for all businesses, this lower cost of entry enables a step up to a framework previously seen as prohibitively demanding.
In conclusion
Ikano Insight has long focused on the benefits of CSRD to business, and it is our view these benefits may become more accessible for organisations if Omnibus proposals are implemented.
The potential risks and impacts of climate change, social disruptions and governance challenges will not reduce anytime soon, irrespective of legislation. The case for ESG framework implementation in any business is strong, and the Omnibus announcement should not divert the strategies of organisations.
Written by Peter Jones
Head of Sustainability
Skilled in sustainability analytics, Peter is passionate about steering organisations toward a sustainable future, leveraging strategic vision and extensive experience for global betterment and bottom-line success.
