Now that the Commission has issued its Omnibus proposal, no one can say for certain what will precisely happen to the scope and requirements of the Corporate Sustainability Reporting Directive (CSRD) in the future.

The Omnibus proposal will  be debated and voted on by the EU Parliament (EP) and the EU Council, who act as co-legislators. It is true that the current majority in the Parliament and the voting majority in the Council are more aligned with a simplification agenda, but the positions expressed by Parliamentary groups and Member States vary widely.

Everyone has in mind the example the EU Regulation on Deforestation-free Products, just a few months ago, where a proposal of the Commission to postpone the entry into force of obligations by one year, triggered proposals by the EU Parliament to water down and even scrap the legislation. In the end, there was only a one-year delay in compliance.  

In the present case, the Commission took care of proposing a postponement of the CSRD implementation by two years and of the transposition and implementation of the Corporate Sustainability Due Diligence Directive (CS3D) by one year through as a standalone proposal, asking the Parliament and the Council to ‘reach rapid agreement on that postponement’. Such a rapid agreement is much awaited by companies, which need to adapt their compliance efforts accordingly, some of them having to report from next year onward. Also, Member States would need to adapt the new timeframe in their own transposition.

The timeline for adoption of the Omnibus proposal, as well as future obligations remain uncertain. Although pausing CSRD workstream might be tempting in this uncertain landscape, CSRD is still a regulation in force in many Member States. Failure to effectively proceed with the CSRD could still expose companies to legal and reputational risks. In addition, pausing the process might be difficult to reinitiate once final decisions are clarified. It seems preferable to wait a few weeks to gain further clarity from a public policy perspective, while closely monitoring legislative developments.

What are the main changes of the Omnibus proposal? 

When looking at the bulk of the Omnibus proposal, most changes are directed at the CS3D. An important change is the suggestion to limit due diligence assessment to Tier 1 (direct suppliers) unless there is plausible information of adverse impacts beyond Tier 1. However, many due diligence obligations that already exist under special regulations are so far not subject to the same limits. Also, CS3D’s unpopularity always came from the fact that it introduces the potential for civil liabilities and fines based on turnover – the Omnibus proposal is dropping these. Such deletion, if effectively implemented, may not have the same impact on every Member State as, for example, the statutory civil liability could still be triggered, although the Commission’s proposals otherwise rely on the maximum harmonization principle, which should ensure that Member States do not create additional obligations when transposing those directives.

Regarding the CSRD, the Commission suggests reducing the scope of application, to align more closely with the scope of the CS3D. The reporting requirements would now only apply to large companies with more than 1000 employees (i.e. companies that have more than 1000 employees and either a turnover above €50 million or a balance sheet above €25 million).

The Omnibus proposal also includes a postponement of the reporting requirements for the companies that are not yet subject to reporting, removes the reasonable assurance standard, and establishes voluntary Taxonomy reporting. The Commission would also revise the European Sustainability Reporting Standards (ESRS). Finally, the value-chain cap established by the CSRD would be extended, in an effort to reduce the trickle-down effect on smaller companies.

What has the Omnibus proposal not changed in CSRD?

Double materiality remains. This is welcomed by companies that have already carried out their resource intensive Double Materiality Exercise.

The ESRS that are in existence remain in force but are said to be subject to simplification in the six months after any Omnibus proposal is approved. In the meantime, the proposal abandoned the adoption of sector-specific ESRS. 

Non-EU entities (e.g. large US corporates) with a large presence in the EU will still need to report most likely in 2029, so there is – to date – no change in that timeline. However, there was a change to the thresholds and these non-EU companies are now required to have a €450 million turnover in the EU to be in scope of CSRD. Most global companies working in the EU will still be in scope of 2029 reporting.

The reporting options have remained untouched, and many companies are still working through the various options. Interestingly the Commission European Financial Reporting Advisory Group (EFRAG) is still getting questions on the interpretation of the reporting options, and Omnibus has missed an opportunity to provide further guidance.

CSRD reports will still be subject to limited assurance but will no longer progress to having reasonable assurance as currently foreseen in the CSRD.

What will happen now in Member States?

We are monitoring the situation across various Member States where CSRD is transposed, to see if any of them call for a moratorium on the enforcement of reporting obligations pending further clarity on an amendment of the CSRD at the EU level. In the meantime, companies are faced with a hard choice, as in principle they need to comply with CSRD as currently transposed in those Member States.

Other Member States not having yet fully transposed the CSRD may be putting their transposition efforts on hold pending the outcome of the Omnibus process, which may add to the confusion for companies having in principle to submit reports in various Member States.

Conclusion

Unfortunately, as the legislative process starts, the Omnibus Proposal triggers more uncertainty than operational solutions. This calls for a quick resolution to the decision-making process. 

We have taken comfort from the fact that the Commission is trying to align CSRD, CS3D and the EU Taxonomy so potentially disclosures can align more closely with compliance needs and reduce the regulatory burden, whilst keeping the virtuous objectives of those regulations. However, the proposal is not as disruptive as some companies were expecting in that the administrative burden for those companies remaining in scope (large companies) is not fundamentally changed.

It should also be noted that not all companies support the Omnibus proposal. In January 2025, major businesses opposed renegotiations of the agreed texts. They voiced their support for the sustainability due diligence and reporting rules that have “the potential to drive long term resilience and value for European businesses in support of competitive advantage” and called for greater consistency and clarity.

While simplification addresses a genuine need for companies, it must be balanced with the long-term benefits of sustainability, as well as ecological and social transitions that have a key strategic impact, going beyond mere compliance requirements.