Omnibus Simplification Package of the European Commission

March 17, 2025

On 26 February the European Commission published the 'Omnibus Simplification Package' (the Omnibus Package). Aimed at improving the EU's competitiveness and enhancing the European Union’s prosperity and economic growth, the Omnibus Package includes proposals to alleviate the burdens on undertakings arising from the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), and to reduce and simplify the obligations under them. Additionally, the Omnibus Package contains proposals to simplify obligations under the Taxonomy Regulation, proposals to simplify the Carbon Border Adjustment Mechanism (CBAM) and reduce obligations under it, as well as to simplify and optimize existing EU investment mechanisms.

Components of the Omnibus Package

The Omnibus Package introduces proposals which affect undertakings in meeting their obligations under the (national implementation of the) CSRD, the CSDDD, the Taxonomy Regulation, and the CBAM Regulation.

The Omnibus Package consists of two parts, being: Omnibus I and Omnibus II. Omnibus I includes, among other things, the proposal for Directive 2025/0044 (Draft Directive 2025/0044) and the proposal for Directive 2025/0045 (Draft Directive 2025/0045), which both mainly contain amendments to the CSRD, the CSDDD, and the Taxonomy Regulation. Additionally, a draft delegated regulation has been proposed to amend the CBAM Regulation: proposal for regulation 2025/0039 (Draft Regulation 2025/0039). Finally, a draft delegated regulation Ares(2025)1546172 on amending the Taxonomy Disclosures Delegated Act, the Taxonomy Climate Delegated Act and the Taxonomy Environmental Delegated Act (the Draft Delegated Regulation), has been published for consultation. Omnibus II consists of a proposal for regulation 2025/0040 on the amendment of multiple regulations and which contains proposals aimed to simplify and optimize existing EU investment programs, such as InvestEU.

We have outlined in the sections below the main proposed changes to the CSRD, the CSDDD and the Taxonomy Regulation, resulting from the proposed changes as specified in Draft Directive 2025/0044, Draft Directive 2025/0045 and the Draft Delegated Regulation.

Main changes to the CSRD

The sustainability reporting obligations under the CSRD are applicable in a phased manner through multiple waves to different categories of undertakings. In summary, the waves are the following:

In the first wave in, 2025, (i) large public interest entities with an average of more than 5,000 employees on their balance sheet date and (ii) public interest entities that are parent undertakings of a large group with, on a consolidated basis, more than an average of 500 employees on their balance sheet date, must report for the financial year 2024.
In the second wave, in 2026, (i) other large undertakings and (ii) other parent undertakings of large groups must report for the financial year 2025.
In the third wave, in 2027, (i) small and medium-sized undertakings (not being micro-undertakings), (ii) small and certain non-complex credit institutions, and (iii) certain captive (re)insurance undertakings must report for the financial year 2026.

Draft Directive 2025/0044 amends the CSRD by postponing the reporting obligation for undertakings that must report for the financial year 2025 (second wave) or 2026 (third wave) by two years. The postponement is intended to prevent these undertakings from having to report for the financial year 2025 or 2026 and then being exempted from this reporting obligation as a result of the (changes under) Draft Directive 2025/0045, which will come into effect at a later stage. This way, unnecessary and avoidable costs for these undertakings are prevented.

Draft Directive 2025/0045 amends the CSRD by limiting the sustainability reporting obligations to large undertakings (i.e., undertakings with (i) more than 1,000 employees and (ii) (a) a net turnover of more than EUR 50 million or (b) a balance sheet total of more than EUR 25 million) and parent undertakings of large groups (i.e., a group with, on a consolidated basis, (i) an average of more than 1,000 employees and (ii) (a) a net turnover of more than EUR 50 million or (b) a balance sheet total of more than EUR 25 million). For other undertakings, a voluntary proportional standard will follow, based on the voluntary standard for small and medium-sized undertakings as developed by EFRAG (formerly: European Financial Reporting Advisory Group) (the SME Standard).

Furthermore, Draft Directive 2025/0045 introduces:

a simplified reporting framework under the ESRS;
a limitation on the information that undertakings subject to the CSRD can request from other undertakings with less than 1,000 employees in their value chain; and
a withdrawal of the possibility for creating a sector specific ESRS.

Main changes to the CSDDD

The CSDDD must be transposed into national legislation by 26 July 2026. The CSDDD includes obligations for undertakings regarding:

due diligence in the field of human rights and the environment;
integrating due diligence into company policies and risk management systems;
identifying and assessing actual and potential adverse impacts, and if applicable, prioritization of identified actual and potential adverse impacts, preventing potential adverse impacts, bringing actual adverse impacts to an end and/or remediation of actual adverse impacts;
notification mechanisms and complaint procedures and communications under the CSDDD; and
establishing and implementing a transition plan for mitigating climate change.

The application of CSDDD for undertakings is spread among the following waves:

In the first wave, from 26 July 2027, the largest European undertakings with more than 5,000 employees and a global net turnover of more than EUR 1.5 billion and non-European undertakings with a net turnover of more than EUR 1.5 billion in the EU must comply with the obligations under the CSDDD.
In the second wave, from 26 July 2028, European undertakings with more than 3,000 employees and more than EUR 900 million net turnover and non-European undertakings with a net turnover of an equivalent amount in the EU must comply with the obligations under the CSDDD.
In the third wave, from 26 July 2029, all other undertakings falling under the CSDDD must comply with the obligations under the CSDDD.

Draft Directive 2025/0044 amends the CSDDD by postponing the entry into force of the CSDDD for undertakings of the first wave by one year to July 2028. The postponement is intended to give these undertakings extra time to prepare for their obligations under the CSDDD. Additionally, the proposal will postpone the transposition period of the CSDDD into national legislation for the member states by one year (to July 2028), taking into account possible delays in the ongoing transposition plans for the CSDDD due to the proposed changes under Directive 2025/0045.

Draft Directive 2025/0045 includes, among other things, the following changes:

Simplifying certain aspects of the due diligence requirements on sustainability, by extending the intervals in which undertakings need to regularly assess the adequacy and effectiveness of due diligence measures, from 1 year to five years and clarifying that undertakings must assess and update the implementation of their due diligence obligations when there are reasonable grounds to believe that the measures are no longer appropriate.
Limiting the information that undertakings can request from SME and small midcap business relationships (undertakings no longer falling under the CSRD obligations) to the information specified in the VSME Standard.
Harmonization with national civil liability regimes. The previous harmonized EU conditions for civil liability are deleted, and the obligation for member states regarding actions by trade unions or NGOs is withdrawn. This will leave it to national law to determine whether its civil liability provisions prevail over the provisions of a third country where the damage occurred.
Aligning the requirements for adopting transition plans for climate change mitigation with the CSRD, by clarifying that transition plan must also put into effect the transition plan for climate change mitigation and the progress thereof.
Extending maximum harmonization to more provisions regarding the main due diligence obligations, ensuring a level playing field across the entire EU.

Main changes to the Taxonomy Regulation

Under the Taxonomy Regulation, an undertaking required to publish non-financial information in its (consolidated) non-financial statement must include information on how and to what extent the undertaking’s activities are associated with economic activities that qualify as environmentally sustainable.

Draft Directive 2025/0044 postpones the aforementioned obligations under the Taxonomy Regulation in line with the amended CSRD by two years.

Draft Directive 2025/0045 limits the aforementioned obligations under the Taxonomy Regulation to undertakings falling under the revised scope of the CSRD, with the possibility for voluntary reporting under the Taxonomy Regulation only being offered to other undertakings with a net turnover up to EUR 450 million.

Additionally, Draft Directive 2025/0045 introduces the possibility to report in accordance with the Taxonomy Regulation even if the undertaking is only partially aligned with the Taxonomy Regulation, fostering a gradual environmental transition of activities and allowing the European Commission to establish further rules regarding the reporting standards under the Taxonomy Regulation.

Finally, the European Commission has submitted the Draft Delegated Regulation for consultation. The Draft Delegated Regulation results in:

a materiality threshold of 10% which must be achieved for certain activities in respect of which information must be disclosed; and
a simplification of taxonomy-based key performance indicators for credit institutions. Credit institutions will be able to omit from the denominator of the Green Asset Ratio exposures that relate to undertakings which are outside the future scope of the CSRD i.e., companies with less than 1,000 employees and net turnover of less than EUR 50 million and/or a balance sheet total of less than EUR 25 million).

Furthermore, the Draft Delegated Regulation contains a proposal regarding:

a clarification of certain ‘do no significant harm’ criteria; and
the simplification and reduction of various reporting templates (and thereby reducing the number of data points).

Transposition and Entry into Force

The proposals under the Omnibus Package have not been submitted for approval by the European Parliament and the European Council yet. Although it is still unknown if and when the proposals under the Omnibus Package will come into effect (albeit in amended form), Draft Directive 2025/0044 indicates that member states have until 31 December 2025, to implement the postponed phasing regarding the CSRD into national legislation. The Draft Delegated Regulation will (if adopted without any amendments) be applicable from 1 January 2026.

Want to receive more information regarding the potential consequences and implications of the Omnibus Package? Please contact the specialists at Meijburg Legal.