What does the EU Omnibus I mean for your business?

Key takeaways: 

• The EU Omnibus I package aims to significantly reduce the administrative burden of sustainability reporting, particularly for small and medium-sized enterprises (SMEs), as well as strengthen the competitiveness of companies.
• The package propose narrowing the scope of mandatory sustainability reporting, focusing on larger companies with significant environmental impacts. If approved by the EU Parliament, key reporting deadlines have also been postponed, giving businesses more time to comply with new regulations.
• Even if your business now finds itself out of scope of regulations, or regulations affecting your business have been delayed, it’s important to not become complacent. Proactive compliance can help enhance your business' reputation and build trust with your stakeholders.

What is the EU Omnibus?

The EU Omnibus package, consisting of Omnibus I and Omnibus II, refers to a set of legislative packages proposed by the European Commission on February 26, 2025.  

Omnibus I aims to simplify and streamline various EU regulations, particularly those related to corporate sustainability reporting and due diligence. The goal is to reduce administrative burdens, especially for small and medium-sized enterprises (SMEs), and to foster a more competitive and sustainable business environment.

Omnibus II introduces several changes to the InvestEU program (which consists of the  InvestEU Fund, InvestEU Advisory Hub, and the InvestEU Portal) aiming to make it more accessible and effective in driving sustainable economic growth across the EU.  

For the purpose of this article, we’ll be looking at the changes proposed in Omnibus I and how they might impact your business.

What are the proposed changes in the EU Omnibus?

Omnibus I introduces several updates to climate reporting regulations, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Carbon Border Adjustment Mechanism (CBAM). Here are some of the key changes to each regulation:

Proposed changes to the Carbon Border Adjustment Mechanism (CBAM)

• Simplification for small importers: The plans would introduce a new de minimis threshold exemption of 50 tonnes, which exempts small importers (mostly SMEs and individuals) from CBAM obligations.
• Streamlined compliance: The authorisation of declarants, the calculation of emissions, and the management of CBAM financial liability would become simplified as a result of the changes.
• Strengthened anti-abuse measures: Measures are proposed to make the CBAM more effective through the development of a joint anti-circumvention strategy with national authorities.

Proposed changes to the Corporate Sustainability Reporting Directive (CSRD)

• Reduction in scope: The number of companies required to report under the CSRD will be reduced by approximately 80%, focusing on larger companies with more than 1,000 employees and a  turnover of more than EUR 50 million or a balance sheet of more than EUR 25 million.  
• Extended timelines: The reporting requirements for large companies and listed SMEs are postponed by two years. Large companies (so-called wave 2) would thus report for the first time for the financial year 2027 and listed SMEs (wave 3) for the financial year 2028.  
• Simplified reporting: The reporting burden for companies in the value chain that are not directly subject to the CSRD is reduced, limiting their reporting to voluntary standards.  
• Alignment with CSDDD: The scope of the CSRD is better aligned with the Corporate Sustainability Due Diligence Directive (CSDDD), ensuring a more harmonized regulatory framework.

Proposed changes to the Corporate Sustainability Due Diligence Directive (CSDDD)

As well as better alignment with the CSRD as just mentioned, other changes include:

• Extended timelines: The application of the CSDDD is proposed to be extended by a year to postpone the deadline for national implementation to 26 July 2027 and the first phase of application for the largest companies to 26 July 2028, giving companies more time to comply with the new requirements.
• Removal of civil liability: The EU-wide civil liability regime is removed, reducing the legal risks for companies.
   

What do the changes mean for your business?

The proposed changes in the EU Omnibus I package has different implications depending on the size of your business. 

For larger businesses, the reduction in the scope of sustainability reporting and removal of sector-specific standards should simplify compliance efforts. The simplification of due diligence requirements should also make it easier to assess and manage sustainability risks within supply chains. Additionally, the postponement of reporting deadlines will provide businesses with additional time to adapt to new requirements and integrate them into existing processes. 

Small and medium-sized enterprises (SMEs) will benefit significantly from the reduction in administrative overhead. The new regulations aim to lessen the reporting burden, allowing SMEs to focus more on their core business activities rather than getting bogged down by compliance requirements. The introduction of de minimis thresholds and simplified CBAM obligations will reduce the complexity and cost of compliance for small importers, making it easier for them to navigate the regulatory landscape.

Moreover, the new "opt-in" framework for taxonomy reporting offers flexibility for smaller companies to voluntarily participate in sustainability reporting if they choose. Doing so could therefore become a strategic advantage for smaller businesses, as proactive compliance can enhance a business' reputation and build trust with stakeholders. 

Our closing thoughts on the EU Omnibus I:

While many businesses may now find themselves out of scope of some EU regulations, or have had obligations delayed or amended, due to recent changes, it's crucial not to become complacent. Getting your house in order now is essential for long-term success. 

Sustainability reporting remains a vital aspect of business operations, reflecting a commitment to environmental responsibility and transparency. Additionally, SMEs are increasingly receiving questionnaires from larger companies seeking to report on their Scope 3 emissions. Therefore, regardless of your business size, it's best to prepare and ensure your sustainability practices are robust and ready for scrutiny.

Climate disclosures and the decarbonisation of industry have advanced rapidly over the past couple of decades. While it's still too early to understand the impact of recent geopolitical changes, the long-term trend is clear: ESG is here to stay. Playing the long game will not only help you stay ahead of regulations but also enhance your reputation and competitiveness in the market.