The European Commission published on 26 February 2025 its awaited Omnibus simplification package proposing the amendment of several pieces of sustainability and ESG-related legislations adopted under the previous Commission mandate (the EU Green Deal).

The proposals, which were announced by Ursula Von der Leyen in November 2024, include:

• A proposal for a Directive amending implementation and transposition deadlines of the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD)
• A proposal for a Directive amending the scope and requirements of the CSRD and CSDDD
• A proposal for a Regulation (not yet published) amending the Carbon Border Adjustment Mechanism (CBAM) Regulation (see available Annex)
• A draft amendment to the EU Taxonomy Delegated Acts, open for public consultation until 26 March 2025

The issuance of the proposals triggers the start of a legislative process that is expected to lead to substantial debates and possible dissentions between the European Parliament and the Council.

Corporate Sustainability Reporting Directive

On the CSRD, the proposal noticeably includes a narrower scope of application (beyond 1,000 employees), a postponement of reporting obligation by two years for companies not yet subject to reporting, voluntary taxonomy reporting and reliance on partial alignment (under some conditions). If the double-materiality assessment is retained, the Commission commits to simplified European Sustainability Reporting Standards (ESRS) and to abandon sectoral ESRS.

Corporate Sustainability Due Diligence Directive

The transposition of the CSDDD and the applicability of its obligations are postponed by one year (respectively 2027 and 2028), while the Commission should issue guidance by 2026. The scope of due diligence is proposed to be limited to Tier 1 suppliers, unless there is “plausible” information of adverse impacts beyond in the supply chain.

Importantly, the amended CSDDD would preclude more stringent requirements by Member States (relying on so-called maximum harmonization) leaving it up to them to rule on civil liability and the amount of penalties for breach of CSDDD obligations rather than this being established by the directive.

The choice of a separate proposal addressing the postponement of deadlines may ensure a swift adoption of the proposed postponements, ahead of the application of the concerned reporting and due diligence requirements under the CSRD and CSDDD.

Amendments on the substance of the text on the other hand are expected to face more hurdles, due to important disagreements between the European Parliament and the Council and within their members.

Contentious points notably include:

• For the CSRD, the reduction of the scope of the reporting (companies subject to reporting & value chain information reported)
• For the CSDDD, restriction of the scope of the due diligence assessment to tier 1 (direct) supplies and removal of civil liability provisions

On the same day, another package on investments was also released with an aim of simplification and increased efficiency

Those proposals open a hybrid momentum where companies need to continue working on complying with their existing or forthcoming obligations under the existing legislations, while factoring the likeliness of important amendments in the coming months. Recent examples of legislative processes at the EU level have shown that the outcome of those processes are uncertain, although the Commission has in the present case sought to anticipate the position of the co-legislators, i.e. the European Parliament and the Council.

Combining the public policy, compliance and legal expertise of our various practice groups on those topics, we can support in helping you understand these changing regulations.