The European Commission (EC) yesterday announced its first “Omnibus” package of proposals aimed at simplifying EU rules, boosting competitiveness, and unlocking additional investment capacity. The package consists of two main proposals: (i) “Omnibus I”, which focuses on reducing reporting and compliance burdens and costs of and the EU taxonomy for sustainable activities (EU Taxonomy), postponing the entry into application of the Corporate Sustainability Due Diligence Directive (CSDDD), and simplifying the carbon border adjustment mechanism (CBAM); and (ii) “Omnibus II”, which would amend the regulations for the InvestEU Program to increase its size, efficiency, and accessibility. If adopted, these measures are expected to generate annual administrative cost savings of approximately €6.3 billion and mobilize an additional €50 billion in public and private investment through InvestEU.
This bulletin summarizes key amendments included in Omnibus I and Omnibus II:
CSRD and EU Taxonomy. The proposed changes in sustainability reporting under the CSRD and EU Taxonomy include:
- Narrower CSRD scope. Removing around 80% of companies from CSRD requirements, focusing obligations on the largest companies with the greatest environmental and social impact. The reporting requirements would only apply to large undertakings with more than 1,000 employees on average (i.e., undertakings that have more than 1,000 employees and either a turnover above €50 million or a balance sheet above €25 million)
- Protection for smaller companies. Ensuring large companies’ reporting requirements do not create excessive burdens for smaller businesses in their value chains.
- Delayed compliance. Postponing CSRD reporting requirements by two years (until 2028) for companies originally scheduled to report in 2026 or 2027.
- Limit on EU Taxonomy reporting. Reducing the reporting burden and limiting mandatory EU Taxonomy reporting to the largest companies (aligning with the CSDDD), while allowing voluntary reporting for others.
- Proportionate standard for voluntary reporting. Issuing a recommendation on voluntary sustainability reporting as soon as possible, based on European Financial Reporting Advisory Group’s (EFRAG) sustainability reporting standard for voluntary use by SMEs that are not in scope of the reporting requirements (VSME), while developing a proportionate standard for voluntary use which would be based on the VSME standard, for undertakings not subject to mandatory sustainability reporting requirements.
- Introduction of partial EU Taxonomy alignment. Allowing companies to report on activities partially aligned with the EU Taxonomy to facilitate a gradual transition to sustainability and introduce an opt-in regime for large undertakings with over 1,000 employees and either €50M+ turnover or €25M+ balance sheet, provided their net turnover does not exceed €450M. Companies claiming EU Taxonomy alignment (full or partial) must disclose turnover and CapEx KPIs and may optionally disclose OpEx KPIs.
- Financial materiality threshold. Introducing a financial materiality threshold for EU Taxonomy reporting and reducing reporting templates by 70%.
- Simplified “Do No Significant Harm” (DNSH) criteria. Easing the most complex DNSH pollution prevention and chemical use criteria across all sectors.
- Adjusted Green Asset Ratio (GAR). Allowing banks to exclude exposures related to companies outside the CSRD scope (i.e., those with fewer than 1,000 employees and less than €50 million turnover) from their GAR denominator.
- Revise European Sustainability Reporting Standards (ESRS). Adopting a delegated act to revise the first set of ESRS to substantially reduce the number of mandatory ESRS datapoints, provide clearer instructions on how to apply the materiality principle, simplify the structure and presentation of the standards, and further enhance the interoperability with global sustainability reporting standards.
CSDDD. The main proposed changes for sustainability due diligence under CSDDD include:
- Simplified due diligence. Simplifying sustainability due diligence requirements by focusing systematic due diligence requirements on direct business partners and reducing the frequency of periodic assessments and monitoring of partners from annual to 5 years, with ad hoc assessments where necessary.
- Reduced burdens on SMEs. Reducing burdens and trickle-down effects for SMEs and small mid-caps by limiting the amount of information that may be requested as part of the value chain mapping by large companies.
- Enhanced harmonization. Further increasing the harmonization of due diligence requirements to ensure a level playing field across the EU.
- Modified civil liability conditions. Removing EU civil liability conditions while preserving victims’ right to full compensation for damage caused by non-compliance and protecting companies against over-compensation.
- Extended compliance timelines. Postponing the application of the sustainability due diligence requirements for the largest companies by one year (to 26 July 2028), while advancing the adoption of the guidelines by one year (to July 2026).
CBAM. The CBAM proposals focus on simplifying compliance and reducing burdens for small importers while maintaining environmental integrity, including:
- New cumulative threshold and exempt small importers. Introducing a new CBAM cumulative annual threshold of 50 tonnes per importer, which would result in exempting around 182,000 or 90% of importers (mostly SMEs and individuals representing very small quantities of embedded emissions) from CBAM obligations, while maintaining more than 99% of embedded emissions in scope of CBAM.
- Streamlined compliance. Simplifying the rules for authorization of CBAM declarants, as well as rules related to CBAM obligations, including the calculation of embedded emissions and reporting requirements.
- Strengthened anti-circumvention rules. Strengthening the rules to avoid circumvention and abuse.
- Future expansion. Confirmation of future extension of CBAM to other ETS sectors, downstream goods, followed by new legislative proposal on the scope extension of CBAM in early 2026.
InvestEU program. The InvestEU program is being expanded to drive strategic investment across Europe. Key changes include:
- Increased investment capacity. Increasing the EU’s investment capacity through the use of returns from past investments, as well as optimized use of funds still available under the legacy instruments, thus allowing for more funding to be made available to businesses. This is expected to mobilize around €50 billion in additional public and private investments.
- Enhanced Member State participation. Make it easier for Member States to contribute to the program and support their own businesses and mobilize private investments.
- Reduced administrative burdens. Simplifying administrative requirements for implementing partners, financial intermediaries and final recipients, notably SMEs, which is expected to generate €350 million in cost savings.
Next Steps. The Omnibus proposals are now subject to review and approval by the European Parliament and Council of the EU. The changes on the CSRD, CSDDD, and CBAM would enter into force once the co-legislators have reached an agreement on the proposals and after publication in the EU Official Journal. The draft Delegated Act amending the current delegated acts under the EU Taxonomy Regulation will be adopted after public feedback and will apply at the end of the scrutiny period by the European Parliament and the Council.
For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.
