/>iOn February 26, 2025, the European Commission (EC) released its much-anticipated Omnibus Package, aimed at streamlining EU regulations, enhancing competitiveness, and unlocking greater investment potential. The context for the proposal is the Competitiveness Compass introduced in January 2025 and the Commission’s work programme published on February 11, which mentioned a series of proposals – among which is the Omnibus Package – to drastically reduce the regulatory and administrative burden by achieving at least 25% reduction in administrative burdens and at least 35% for SMEs until the end of the EC’s mandate.
The first Omnibus Package includes the following set of measures:
- A proposal for a Directive amending the CSRD and the CSDDD (Omnibus II)[1]
- A proposal that postpones the application of all reporting requirements in the CSRD for companies that are due to report in 2026 and 2027 (so-called wave 2 and 3 companies) and which postpones the transposition deadline and the first wave of application of the CSDDD by one year to 2028 (Omnibus I)[2]
- A draft Delegated act amending the Taxonomy Disclosures and the Taxonomy Climate and Environmental Delegated Acts open for public consultation until 26 March 2025[3]
- A proposal for a Regulation amending the Carbon Border Adjustment Mechanism Regulation (to which only the Annex has been published)[4]
- A proposal for a Regulation amending the InvestEu Regulation
In this Advisory, we will focus on the changes introduced by the Omnibus Package in the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
I. Amendments to the Corporate Sustainability Reporting Directive (CSRD)
Today's package proposes a two-year delay in the reporting requirements for large companies that have not yet begun implementing the CSRD, as well as for listed SMEs (Waves 2 and 3). This postponement aims to give co-legislators time to finalize the Commission’s proposed substantive changes. However, the CSRD has already been transposed into national laws across most EU member states, and many U.S. companies have begun preparations to comply with reporting obligations for financial years starting on or after January 1, 2025. As a result, while some companies may benefit from the additional time, others—having already invested in compliance efforts—now face uncertainty about the evolving regulatory landscape and whether further changes may impact their reporting strategies.
The main changes include:
1. Reduction of the scope of reporting companies:
The Commission proposes raising reporting thresholds to better align with the Corporate Sustainability Due Diligence Directive (CSDDD), potentially excluding many companies from the scope of the CSRD by 80%. In detail, this means:
- Under the current framework, EU companies and groups fall within the reporting scope if they exceed at least two out of three thresholds: a balance sheet total of €25 million, a worldwide net turnover of €50 million, or a workforce of 250 employees. However, under the proposed changes, only EU entities with at least 1,000 employees would be required to report, and they must also exceed either a €25 million balance sheet total or a €50 million net turnover. This shift significantly narrows the scope of companies subject to reporting obligations.
- For non-EU ultimate parent companies, the current rules require reporting if the company generates at least €150 million in EU net turnover at the group level and has either an EU subsidiary already subject to CSRD or an EU branch with a turnover of at least €40 million. The proposed changes raise the EU net turnover threshold to €450 million and require that the company have at least one large EU subsidiary—defined as an entity exceeding two out of three criteria: a €25 million balance sheet total, a €50 million turnover, or 250 employees—or an EU branch generating €50 million in turnover.
2. Restrictions on Value Chain Reporting:
At present, companies are required to disclose information on their own operations, subsidiaries, and both upstream and downstream value chains, with certain reporting obligations benefiting from a three-year transition period. Under the Omnibus Package, however, CSRD-compliant companies would no longer be obligated to gather data from entities within their value chain that do not fall under CSRD’s scope. Instead, they would refer to new voluntary reporting standards established by the Commission, which will be based on the Voluntary Sustainable Reporting Standard for Non-Listed SMEs (VSME) developed by EFRAG.
3. No delay to assurance requirements and no transition to reasonable assurance:
CSRD reporting will continue to be subject to limited assurance, and the Omnibus Package does not introduce any further delays beyond the two-year general stop-the-clock extension. However, in response to concerns about excessive assurance procedures raised by the first wave of CSRD reporters, the Commission intends to issue targeted guidance on assurance requirements before finalizing limited assurance standards, which are expected to be adopted by October 1, 2026.
Under current rules, the Commission is required to assess the feasibility of transitioning to reasonable assurance and adopt corresponding standards by October 1, 2028. The Omnibus Package removes this obligation, meaning that CSRD reports will remain under limited assurance indefinitely. This change eliminates the possibility of stricter assurance requirements in the future, reducing the compliance burden on companies.
4. Significant revisions to the ESRS:
The Commission has reaffirmed its commitment to revising the European Sustainability Reporting Standards (ESRS). The revised delegated act will aim to reduce the number of required data points, clarify provisions that have been deemed unclear, and eliminate redundant reporting requirements. These updates are expected to be finalized in time for the second wave of CSRD-reporting companies, whose obligations will now begin for financial year 2027, rather than 2025 as originally planned.
5. Deletion of sector-specific standards requirement:
Previously, sector-specific ESRS standards were scheduled for adoption by June 30, 2026. However, the Omnibus Package proposes deleting this requirement, meaning companies will no longer be subject to mandatory sector-specific reporting standards. Instead, they will need to rely on entity-specific disclosures whenever material sustainability issues are not adequately addressed by the existing ESRS framework.
II. Amendments to the Corporate Sustainability Due Diligence Directive (CSDDD)
The CSDDD is scheduled to come into effect on July 26, 2027. Unlike the CSRD, however, the CSDDD has not yet been incorporated into the national laws of any EU member states. If the proposed Omnibus package passes without changes, the scoping thresholds will stay the same, meaning that companies previously identified as falling under the CSDDD will likely remain within its scope. A one-year delay will push back the transposition deadline to July 26, 2027, and extend the start of its application to July 26, 2028. In the meantime, the necessary guidelines by the Commission will be advanced to July 2026, to provide additional guidance and allow an extra year to prepare for compliance.
The main changes to the CSDDD include:
1. Exempting companies from the requirement to consistently carry out detailed assessments of potential or actual negative impacts in complex value chains involving indirect business partners and requiring full due diligence beyond direct partners only when the company has credible evidence suggesting that such impacts may have occurred or could occur in those areas.
2. Simplifying various aspects of sustainability due diligence to reduce unnecessary complexity and costs for large companies. This includes extending the time between regular assessments and updates from one year to five years, while clarifying that a company must evaluate the effectiveness of its due diligence measures and update them if there are reasonable grounds to believe they are no longer sufficient. Additionally, the stakeholder engagement requirements will be streamlined, and the obligation to terminate business relationships as a last resort will be removed.
3. Limiting the flow of information companies can request from their small and medium-sized business partners (defined as companies with fewer than 500 employees) to the information outlined in the CSRD’s voluntary sustainability reporting standards (VSME standard), unless additional data is needed for mapping impacts not covered by these standards, and the information cannot reasonably be obtained in other ways.
4. Removing the EU's harmonized civil liability conditions and leaving the responsibility for defining civil liability standards to national laws. This also includes revoking the obligation for Member States to allow trade unions or NGOs to initiate representative actions and letting national law determine whether its civil liability rules override those of third countries where harm occurs.
5. Aligning climate mitigation transition plan requirements with those in the CSRD.
6. Extending maximum harmonization to more provisions concerning core due diligence obligations to ensure a consistent level playing field across the EU.
7. Eliminating the review clause on including financial services within the scope of the due diligence directive.
III. Next Steps
The legislative proposals are currently undergoing the ordinary legislative procedure. The Commission has urged the European Parliament and the European Council to expedite the Omnibus package without revisiting other parts of the legislation. However, once the legislative process begins, the Commission will have limited influence over whether the Parliament and Council propose additional amendments. As a result, a seamless adoption of the proposed changes is not guaranteed, and further amendments or new requirements may still arise.
As a directive, the Omnibus II Proposal amending the CSRD and CSDDD requires that, even if it is quickly agreed upon and adopted, member states will have 12 months to incorporate the omnibus text into their national laws.
[1] Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464, and (EU) 2024/1760, as regards certain corporate sustainability reporting and due diligence requirements. Available at: https://commission.europa.eu/
[2] Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directives (EU) 2022/2464 and (EU) 2024/1760 as regards the dates from which Member States are to apply certain corporate sustainability reporting and due diligence requirements. Available at: https://commission.europa.eu/
[3] https://ec.europa.eu/info/law/
[4] ANNEXES to the Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2023/956 as regards simplifying and strengthening the carbon border adjustment mechanism. Available at: https://commission.europa.eu/
