TL;DR
EU Omnibus Bill proposes major CSRD and CS3D reforms, reducing reporting requirements and easing compliance for businesses.
Smaller companies benefit most, with higher thresholds for mandatory reporting and the elimination of sector-specific standards.
Due diligence rules are softened, limiting corporate responsibility to direct suppliers and delaying compliance deadlines.
Regulatory simplification aims to cut costs, but critics warn it may weaken sustainability transparency and enforcement.
The European Commission has unveiled its long-awaited Omnibus Package to simplify the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D), two key elements of the Green Deal for businesses. However, rather than a mere simplification, this reform represents a significant reduction in the sustainability reporting requirements for companies. In this blog post, we break down the significant changes affecting EU sustainability reporting, how it will affect businesses and the next steps for implementing these changes.
Reducing Environmental Obligations for Businesses
The overarching goal of the new European Commission is to enhance competitiveness by easing environmental obligations. The proposed legislative package, referred to as the Omnibus Bill, seeks to deliver on this objective. The Commission has pledged an unprecedented effort to cut administrative burdens by at least 25%, with a 35% reduction specifically for SMEs. Consequently, the CSRD and CS3D, two flagship directives of the Green Deal, are set to undergo substantial revisions.
A More Targeted Scope
The Omnibus reforms significantly reduce the number of businesses subject to sustainability reporting obligations like the CSRD. Previously, the CSRD encompassed a broad range of enterprises, including many small and medium-sized businesses (SMEs). Under the revised framework, only companies with over 1,000 employees and a turnover exceeding €50 million or a balance sheet above €25 million will be required to comply. Even publicly listed SMEs, once included in the scope, are now exempt. This change responds to growing calls for regulatory simplification and aims to alleviate the administrative burden on smaller businesses.
Sector-Specific Standards Abolished
One of the most notable aspects of the proposed reform is the elimination of most sector-specific reporting standards. Additionally, the number of mandatory data points has been reduced, offering greater clarity on materiality principles to prevent excessive reporting. These changes seek to align European standards more effectively with international frameworks and enhance interoperability.
Find out more about the changes to the reporting schedule following this first report.
Company category | Before (Initial CSRD) | After (proposed first report) |
Companies under NFRD (>500 employees, meeting previous thresholds) | 2025 (financial year 2024) | 2025 if >1,000 employees and meeting financial thresholds, otherwise excluded |
Large companies not under NFRD (>250 employees, previous thresholds) | 2026 (financial year 2025) | 2028 if >1,000 employees and meeting financial thresholds, otherwise excluded |
Listed SMEs | 2027 (financial year 2026) | Excluded if <1,000 employees, otherwise 2029 if applicable |
Non-EU companies | 2029 (financial year 2028) | 2031 if >1,000 employees and meeting financial thresholds, otherwise excluded |
Changes to Required Level of Assurance
When a company publishes its sustainability data (carbon emissions, ESG, etc.), an external auditor verifies its accuracy. There are two levels of assurance for this verification:
Limited assurance (less strict): A moderate review of the data, providing a relative level of confidence.
Reasonable assurance (more strict): A more thorough examination, similar to a financial audit, ensuring higher reliability.
Initially, the CSRD planned a gradual transition from limited to reasonable assurance. However, this proposal removes that progression, maintaining only limited assurance with no future requirement for stricter oversight.
Changes to Due Diligence Requirements
The CS3D, which governs corporate responsibility across supply chains, has also been adjusted. Initially, businesses were required to monitor their entire value chain, including indirect suppliers. Under the new framework, companies will only be responsible for direct business partners. Furthermore, the previously proposed mandatory contract termination in cases of non-compliance has been scrapped, and penalties will now be determined at the national level rather than enforced through a standardized EU-wide system.
Company category | Before (Initial CSRD) | After (proposed first report) |
Group I (>5,000 employees, >€1.5bn global net turnover) | 2027 | 2029 |
Group II (>3,000 employees, >€900m global net turnover) | 2028 | Excluded |
Delayed Implementation
To allow businesses more time to adapt, compliance deadlines have been postponed. Companies with 250 to 999 employees now have an additional two years before they must adhere to CSRD reporting obligations, while the phased implementation of the CS3D has been extended by one year.
Despite these adjustments, questions remain about the long-term implications. Critics argue that loosening requirements may hinder regulatory harmonization across the EU and reduce corporate transparency, potentially undermining the bloc’s leadership in sustainability initiatives.
A Delicate Balance Between Regulation and Competitiveness
The European Commission aims to strike a balance between maintaining the spirit of the Green Deal and reducing bureaucratic complexity. However, this recalibration comes with risks. While the reforms offer relief to businesses, they also raise concerns about whether Europe can maintain its ambitious sustainability goals.
The effectiveness of these changes will largely depend on how member states implement them. With each country retaining discretion over civil liability rules and financial penalties, businesses operating across multiple jurisdictions may face confusing and inconsistent guidelines. As a result, companies must remain proactive in anticipating compliance requirements, even as the regulatory landscape evolves.
Projected Cost Savings
If implemented as proposed, the Commission estimates that these reforms could reduce annual administrative costs by approximately €6.3 billion. Additionally, the expected reduction in regulatory burdens could free up an estimated €50 billion in public and private investment capacity to support EU policy priorities.
How This Will Affect Businesses
✅ Immediate reduction in administrative burden for affected organizations.
✅ Lower compliance costs while awaiting simplified standards.
✅ Reduced cascading impact on subcontracting SMEs.
✅ Alignment of CSRD and CSD3D timelines, preventing regulatory overlaps.
What's Next for CSRD after the Omnibus Bill?
The proposed legislative changes must now be reviewed and approved by the European Parliament and the Council. If implemented as planned, they could significantly reshape corporate sustainability reporting across Europe. Businesses should closely monitor these developments and prepare for potential adjustments to compliance strategies. The changes will take effect once an agreement is reached and the revised legislation is published in the Official Journal of the EU.
While the intention behind these revisions is to reduce administrative complexity, the challenge will be ensuring that sustainability objectives remain at the forefront. Striking the right balance between economic competitiveness and environmental responsibility will be crucial for Europe’s long-term ambitions in sustainable development.
Summary of Next Steps
✅ Adoption expected in 2025, with swift implementation.
✅ Consultation with Member States for a harmonized transposition.
✅ Publication of a Commission recommendation for voluntary reporting by non-covered companies (based on the VSME standard developed by EFRAG).
Conclusion
Today, the message is clear: the EU remains committed to its climate goals and social agenda but is opting for a more pragmatic approach. Europe is not abandoning extra-financial transparency; instead, it is reserving it for large-scale organizations while providing relief and breathing space for those that feared being overwhelmed—both in complexity and profitability.
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