EU Omnibus Package: A game-changer for corporate sustainability reporting?
After long months of negotiation, the EU Omnibus negotiations seemed to be nearing their conclusion. However, recent developments in the European Parliament have proven difficult with long rounds of infighting on the Omnibus amendments between Parliament parties, which could lead to further delays and changes, which will ultimately determine future sustainability reporting requirements under the CSRD and the CSDDD.
In this article, we highlight the key aspects of the originally proposed Omnibus package along with some important implications for corporate sustainability reporting and nature restoration to guide businesses on how they can report their corporate sustainability efforts in the future.
Background
As part of the EU’s new large-scale effort to boost innovation and economic growth, the European Commission introduced the Omnibus Simplification package in February 2025.
Following this announcement, the first “Stop the Clock” Directive was published in April 2025 as the first measure enacting the proposed Omnibus changes. The main aim of this first Omnibus Directive (EU) 2025/794 was to allow for more negotiation time on the ongoing, more substantial discussions on simplifying the existing sustainability reporting obligations.
On 23 June 2025, the European Council adopted its final position on the second Omnibus proposal proposed by the Commission. The Council’s position broadly aligns with the EU Commission’s proposal to reduce the CSRD and CSDDD reporting burden.
As negotiations progress, in a next step the EU Parliament is expected to adopt its final position, which is proving difficult with weeklong infighting among the Parliament’s main political parties – the mainstream pro-European parties, and the far-right and conservative groups. A first vote by the European Parliament JURI Committee on 13 October 2025 suggested to further weaken the corporate sustainability reporting originally proposed by the EU Commission in February. It also suggested to fast-track changes by skipping a full Parliament vote on the issue and going straight into discussion with the EU Council and Commission.
In the latest development, the European Parliament overturned the Committee’s decision to skip a full Parliament vote on 22 October 2025, allowing the full Parliament to vote on amendments on 13 November 2025, which could lead to further delays and changes. The ongoing infighting between parties shows that, for a large selection of Parliament the weakening of corporate sustainability reporting does not go far enough, while other parties think that the reporting guidelines under the CSRD and CSDD are weakened too much.
Following the Parliament’s final decision, trilogues negotiations between the EU Parliament, the Council, and the EU Commission will be planned. The aim is to reach a final agreement on the second Omnibus by the end of 2025 or early 2026.
What is the Omnibus Package?
The Omnibus package presents a bundle of proposals by the EU Commission to simplify EU rules on sustainability finance reporting, sustainability due diligence and European investment programmes.
It has its roots in a report from September 2024, published by Mario Draghi, former European Central Bank President, in which he outlined his vision on the future of European competitiveness. In his ambitious report, Draghi highlighted some key challenges for the European Union, including the need to “harmonise decarbonisation with competitiveness” and closing the innovation gap with the US.
Acting on Draghi’s recommendations, the Commission presented the Omnibus package in an attempt to simplify EU sustainability disclosures and reduce the administrative burden for businesses, while maintaining the EU’s ambitious environmental objectives. Whether this is a feasible balancing act or a setback for the EU’s sustainability goals remains to be seen and requires a closer look at the proposed amendments.
Proposed Amendments to EU CSRD, CSDDD and EU Taxonomy
Currently, businesses within the EU have to comply with several mandatory sustainability directives, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDD), and the EU Taxonomy Regulation. The Omnibus simplification measures propose changes to all three directives. Below is an overview of the directives in their current form and the amendments proposed by, or already enacted through the Omnibus package.
Corporate Sustainability Reporting Directive ((EU) 2022/2464) (CSRD)
What is CSRD Reporting?
Broadly speaking, the Corporate Sustainability Reporting Directive (CSRD) is an EU regulation that mandates around 50,000 companies currently in scope to report on their environmental, social, and governance (ESG) performance. Companies in scope include:
Large companies: companies that meet at least two of the following criteria – total assets exceeding €25 million; a net turnover exceeding €50 million; more than 250 emloyees.
Listed companies: companies listed on regulated markets in the EU (including SMEs)
Non-EU undertakings generating a (consolidated) net turnover of more than €150 million in the EU.
It came into effect on January 1, 2024, replacing the Non-Financial Reporting Directive (NFRD). The goal is to provide consumers, and especially investors, with reliable and comparable information on the sustainability and social impact of businesses, therefore informing investment decisions. The argument is that low-quality sustainability reporting can have negative effects on the sustainable investment market. The specific disclosure requirements are detailed by the European Sustainability Reporting Standards (“ESRS”) to ensure that companies have clear standards to report consistently and comparably. The CSRD introduces some key concepts, including:
Double Materiality: requires companies to assess and report on two dimensions: (1) how sustainability issues impact their business (the "outside-in" perspective) and (2) how their activities affect society and the environment (the "inside-out" perspective).
Value Chain Reporting: The reporting boundary has expanded to include the entire value chain in measuring and reporting social and environmental impact.
Sustainability strategy and business model: Businesses are required to set a strategy to disclose the business model’s resilience towards sustainability-related risks and climate scenarios.
Enacted “Stop-the-Clock” changes:
Under the new “Stop-the-Clock” Directive published on April 16 2025, the application of sustainability reporting requirements under the CSRD are being postponed for large companies that have not yet started reporting, as well as listed SMEs, for two years.
Further proposed Omnibus changes:
Focus on large companies: Further to this, the second proposed Omnibus Package would fully remove around 80% of companies from the scope of CSRD, focusing the sustainability reporting obligations on the largest companies, which are more likely to have the biggest impacts on people and the environment. Under the Commission’s proposal, all companies with less than 1,000 employees and a turnover of less than €50 million would fall outside the scope of the CSRD.
Value chain reporting: Following the above amendments, larger companies would not be required to obtain information from other businesses in their value chain with fewer than 1,000 employees. The goal with this measure is to protect SMEs from excessive sustainability information requests they would receive if they were included in the value chains of larger companies.
Simplification of ESRS: For the companies in scope (above 1,000 employees and €50 million turnover), the Commission suggests adopting a delegated act to revise and simplify the existing sustainability reporting standards (ESRS). The goal is to reduce the volume of disclosures, for instance, by clearly distinguishing between mandatory and voluntary datapoints. Although the concept of double materiality would remain, clearer instructions on applying the materiality principle are planned.
Voluntary Reporting Standards: The proposal suggests that the Commission would adopt delegated acts to provide sustainability reporting standards for companies that are outside the scope of the CSRD, offering them the option to report on a voluntary basis.
Corporate Sustainability Due Diligence Directive ((EU) 2024/1760) (CSDDD)
What is the CSDDD?
Approved by the EU Council in May 2024, the CSDDD sets up a framework for sustainability due diligence for large EU companies and non-EU companies with significant EU activity. It sets obligations for companies to address actual and potential adverse impacts on human rights and the environment, including those related to their own operations, their subsidiaries, and their suppliers. Companies that are in-scope of the CSDD originally follow the below phased-in approach:
From 26 July 2027 – companies with an average of 5,000 employees and €1.5b in annual turnover
From 26 July 2028 – companies with an average of 3,000 employees and €900m in annual turnover
From 26 July 2029 – companies with an average of 1,000 employees and €450m in annual turnover
Enacted “Stop-the-Clock” changes:
Under the new “Stop-the-clock” Directive, the adoption of the guidelines into national law is postponed by one year to 26 July 2027.
The enacted changes also give companies more time to prepare for the new requirements by postponing the first phase of the CSDDD's application to in-scope companies by one year to 26 July 2028.
Further proposed Omnibus changes:
In February 2025, the Commission proposed changes to the CSDDD, suggesting that companies with fewer than 1,000 employees and a turnover below €450 million would no longer be included within its scope.
The Omnibus package further suggests simplifying sustainability due diligence requirements so that companies in scope avoid unnecessary complexities and costs.
It also aims to reduce 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.
Originally, the CSDD sets out civil liability provisions, meaning that companies can potentially be liable to pay compensation for damage caused to a person due to failure to comply with the directive. The Omnibus Package proposes to remove these civil liability conditions.
EU Taxonomy Regulation
What is the EU Taxonomy Regulation?
At its core, the EU Taxonomy Regulation acts as a transparency tool that sets out a common definition of economic activities that can be considered environmentally sustainable, aiming to create more transparency on the financial market, guide investment decisions and prevent greenwashing.
Companies that fall under the scope of the CSRD have to report to what extent their activities are covered by the EU Taxonomy and comply with the criteria set out in the Taxonomy delegated acts. At the same time, the taxonomy regulation also applies to financial market participants selling sustainable financial products who must disclose the proportion of their underlying investments that are aligned with the taxonomy under the Sustainable Finance Disclosure regulation (SFDR).
Proposed Omnibus changes:
The Omnibus package proposes to reduce the burden of the EU taxonomy reporting obligations to limit it to the largest companies only. Companies with less than 1,000 employees and a net turnover of less than EUR 450 million would fall outside the scope going forward.
Under the new proposal, businesses with an annual turnover of less than EUR 450 million are allowed to voluntarily report their progress and alignment with the Taxonomy.
The new proposal adds the option of reporting on activities that are “partially aligned” with the EU Taxonomy, making it easier for businesses to demonstrate their sustainability efforts.
The proposal also calls for simplified reporting templates and introduces more flexibility in how companies in scope report their alignment with the Taxonomy, potentially reducing the administrative burden.
Omnibus Relevance for Nature Restoration
The recent developments will likely see corporate sustainability reporting and due diligence rules further weakened in many ways going beyond the Commission original proposal for simplifying the policies. This overall trend paints a concerning picture. The CSRD and CSDDD are crucial instruments for helping companies address sustainability risks and mitigate significant impacts throughout their value chains. The weakening of these policies can have long-lasting effects, especially also for nature restoration. There is already a significant biodiversity conservation and nature restoration funding gap, with the vast majority of funding currently coming from public sources. The stimulation of private financing is critical to close the funding gap and achieve the 2030 biodiversity goals, as outlined in the Nature Restoration Regulation (NRR). “Watering down” the sustainability reporting requirements under the CSRD could negatively affect the amount of private financing flowing into nature restoration projects, as fewer companies are encouraged to integrate nature finance into their business strategies. Up to 80% of companies will be removed from the scope of the CSRD, limiting the number of companies that have to report their environmental impacts. While other companies can still choose to report voluntarily, this might reduce the immediate potential for the CSRD to drive the flow of private investment into nature-based solutions and biodiversity projects.
Another key concern arising from the proposed Omnibus Package is that these changes could limit the availability of good quality consistent data needed for decision-making by investors. Reliable good-quality data is critical for shifting private capital into environmental and socially sustainable economic activities. The lack of reliable data will add difficulty to making environmentally sound investment decisions.
Voluntary Reporting Now Means Staying Ahead
While the proposed Omnibus Package is set to exempt at least 80% of companies from the CSRD’s mandatory reporting, those that voluntarily choose to disclose sustainability efforts under the EU CSRD going forward, will gain a strategic advantage in a competitive, increasingly sustainability-focused landscape. The ongoing Omnibus discussions foresee a simplified voluntary standard for SMEs (VSME) falling outside the scope of CSRD to ensure consistency and comparability for companies that choose to report voluntarily. Reporting under this standard can be a unique opportunity for any company to position themselves ahead of the curve by:
Enhancing investor trust: Simplified CSRD reporting will not remove the need for investors to have reliable and good-quality data to assess company sustainability claims and make environmentally sound investment decisions. Companies that voluntarily report under CSRD gain investor confidence.
Strengthening supply chain partnerships: Future compliance with CSRD can strengthen supply chain partnerships. There is a high likelihood that supply chains will continue to seek sustainability data from smaller companies, even if they fall outside the scope of CSRD in the future. Key principles such as supply chain reporting and the double-materiality concept are deeply rooted in the CSRD and regarded as best practices by many companies and investors.
Being prepared for future changes: Reporting ensures businesses are prepared if thresholds change or stakeholders demand more disclosure in the future.
CSRD reporting has evolved beyond being a mere compliance exercise; it offers a strategic advantage for maintaining competitiveness in a market that increasingly values transparency and accountability.