The Omnibus Simplification Package: explained

In response to concerns over complexity in sustainability regulation, the European Commission has introduced the Omnibus Simplification Package, a proposal aimed at streamlining corporate sustainability reporting while maintaining the EU’s sustainability goals.

Discussions surrounding the Omnibus Package have already generated considerable attention, especially after a first draft was released by the European Commission on February 26, 2025.  

While the exact content of the Omnibus Package is still being negotiated, we, at Normative, want to provide some clarity amidst the current speculation. This post outlines what is currently known about the Omnibus Simplification Package, the potential implications for corporate sustainability reporting, and what businesses should consider as the regulatory landscape continues to evolve.

What we know so far about the Omnibus Simplification Package

The European Commission’s Omnibus Simplification Package introduces amendments and clarifications to key sustainability regulations to streamline requirements and reduce administrative burdens. Currently, businesses must comply with multiple overlapping directives, each with distinct but interconnected objectives. These include:

• The Corporate Sustainability Reporting Directive (CSRD): Framework that outlines how businesses should create sustainability reports, requiring detailed disclosures on their environmental, social, and governance impact.
• The EU Taxonomy Regulation: Defines and identifies real environmentally sustainable activities, requiring businesses to report the share of their revenue, capex, and opex linked to these activities, aiming to guide investments and prevent greenwashing.
• The Corporate Sustainability Due Diligence Directive (CSDDD): While not yet implemented, it will require businesses to disclose how they manage and address human rights and environmental risks in their value chains, promoting accountability and ethical practices.

By refining these frameworks, the Omnibus proposal seeks to eliminate redundancies, lower compliance costs, and create a more efficient reporting system. The Commission has outlined an explicit goal of reducing reporting burdens by 25% for large companies and 35% for SMEs, reflecting a broader effort to simplify sustainability disclosures while maintaining the EU’s ambitious environmental objectives.

Proposed amendments to the EU Taxonomy, CSRD, CSDDD and CBAM

The current draft of the Omnibus Simplification Package as of February 26, 2025, proposes changes to the EU Taxonomy, the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD). These proposed changes are aimed at simplifying the regulations and reducing the reporting burden for businesses. Below is an overview of the key proposed amendments:

EU Taxonomy

• Voluntary Taxonomy Reporting: The proposal suggests allowing large companies (with annual turnover below EUR 450 million) to voluntarily report their progress towards sustainability goals, acknowledging their efforts toward alignment with the Taxonomy.
• Partial Alignment Reporting: It is proposed that businesses under EUR 450 million turnover be permitted to report on activities that meet some, but not all, of the Taxonomy’s technical criteria, making it easier for them to demonstrate their sustainability efforts.
• Flexibility in Reporting: The proposal introduces more flexibility in how companies in scope report their alignment with the Taxonomy, potentially reducing the administrative burden.
• Simplified Reporting Templates: The proposal calls for simplified reporting templates by removing certain detailed requirements. This includes no longer needing to separately report activities aligning with different Taxonomy objectives, and a combined approach for reporting on DNSH (Do No Significant Harm) and nuclear/fossil gas activities.
• Clarification on Appendix C: The amendments aim to clarify issues with Appendix C related to the application of exemptions from EU environmental laws that affect compliance with the Taxonomy criteria.
• Exclusion from Reporting: One of the proposed changes is to exempt companies with fewer than 1,000 employees or those with an annual turnover under EUR 450 million from the reporting requirements altogether.

Corporate Sustainability Reporting Directive (CSRD)

• Revision of Standards: The proposal suggests a revision of the first set of European Sustainability Reporting Standards (ESRS) to remove data points that are considered less important for general sustainability reporting, which could make reporting simpler and more focused.
• Delayed Reporting Dates: For companies in wave 2 (large companies) and wave 3(SMEs), the proposed changes suggest postponing the start of sustainability reporting until 1 January 2028, instead of 2026, allowing companies more time to prepare.
• 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.
• Value Chain Reporting: The proposed changes would specify that companies will not be required to obtain information from other businesses in their value chain with fewer than 1,000 employees, as long as those companies are only reporting voluntarily.

Corporate Sustainability Due Diligence Directive (CSDDD)

• Broader Harmonization: The proposal aims to extend the scope of maximum harmonization, applying it to more provisions that regulate the core aspects of the due diligence process.
• Simplified Definition of Stakeholder: The definition of “stakeholder” is proposed to be simplified, focusing on workers, their representatives, and individuals or communities directly affected by the company’s actions.
• No Requirement for Transition Plan: One proposed change is the removal of the requirement for companies to implement a transition plan for climate change mitigation, which could reduce reporting complexity.
• Changes to Penalties: The proposal includes a new approach to penalties, aimed at ensuring a fair and consistent application of fines and sanctions across EU member states.
• Civil Liability Changes: The proposal suggests removing the specific EU-wide civil liability regime and eliminating the requirement for member states to allow civil society organizations to represent victims in court.
• Extended Deadline for Guidelines: The deadline for issuing guidelines on how companies should conduct due diligence is proposed to be extended by six months, providing businesses more time to understand and comply with the new requirements.
• Value Chain Due Diligence Limited to Tier 1 Suppliers: The proposal narrows the scope of due diligence by focusing on direct (tier 1) suppliers and business partners. This means companies are mainly responsible for assessing and addressing any adverse impacts within their own operations, subsidiaries, and direct relationships, rather than further down the supply chain.

Carbon Border Adjustment Mechanism (CBAM)

In addition to the adjustments in CSRD,CSDD and the EU Taxonomy, there are proposals aimed at simplifying the Carbon Border Adjustment Mechanism (CBAM) as a part of the Omnibus Simplification Package. Here is a breakdown:

• De Minimis Threshold for Small Importers: A new de minimis threshold is being considered to exempt small importers from CBAM obligations. This includes an exemption of importers handling fewer than 50 tonnes of imports annually in key sectors (aluminium, cement, fertilizers, iron and steel).
• Simplifications for Large CBAM Importers: Several adjustments are being proposed to ease the process for large CBAM importers including:
  • Making the consultation step in the authorization optional.
  • Allowing authorized declarants to delegate CBAM declarations to third parties, such as consultants or environmental experts.
  • Excluding non-calcined kaolinic clays from the scope of CBAM.
  • Adjusting data collection methods to simplify compliance.
  • Considering only direct emissions from electricity use in CBAM calculations.
  • Aligning annual deadlines for various CBAM activities to simplify the process
• First-Year Flexibility: Instead of being required to purchase CBAM certificates by the end of 2026, it is being suggested that importers would be allowed to start purchasing them in February 2027, giving them more time to adjust.
• CBAM Certificate Management: The proposal suggests revising the ‘80% rule’ for CBAM certificate management, which currently requires importers to hold certificates for 80% of their carbon emissions, to a ‘50% rule,’ meaning importers would only need to hold certificates for 50% of their carbon emissions.

Next steps for the Omnibus Simplification Package: legislative process & timeline

The Omnibus Simplification Package has now been published as an official legislative proposal, marking a significant step forward in the EU’s efforts to simplify sustainability regulations. This means that the proposed changes, including those to the CSRD, EU Taxonomy, and CSDDD, are now part of the formal legislative process. However, it’s crucial to understand that this is only the beginning. The European Commission’s publication of the proposal initiates a complex and lengthy process involving negotiations, amendments, and further discussions across multiple EU institutions.

Here’s an overview of what’s next for the Omnibus Simplification Package:

The timeline for adoption remains uncertain, but if the proposal follows a typical legislative path, it could take years before it is formally enacted. Given the complexities of sustainability regulation and the varying priorities of EU member states, negotiations may lead to significant adjustments in the final version.

While the specifics of the Omnibus Package are still being shaped, its potential impact on businesses is already a key topic of discussion. In the next section, we will explore some of the most debated aspects of the proposal.

Addressing key concerns: where they came from and what they mean

It’s essential to understand the sources behind the claims and concerns that have emerged from discussions surrounding the Omnibus Simplification Package and what the actual impact might be for businesses. Below are some of the most debated aspects of the proposal, where the ideas originated, and how they might evolve:

Raising the reporting requirement threshold to 1,000 employees

• What is being proposed: The Omnibus Simplification Package includes a proposal to raise the employee threshold for mandatory sustainability reporting under the CSRD from 250 to 1,000 employees. If adopted, this change would significantly reduce the number of companies required to report, exempting approximately 85% of businesses that currently fall under the directive. Listed SMEs, which were previously required to report under the CSRD, would also be removed from the scope. Under the new threshold, only companies with at least 1,000 employees and either a turnover above €50 million or a balance sheet total exceeding €25 million would be subject to reporting obligations.
• This proposal is intended to align the CSRD more closely with the Corporate Sustainability Due Diligence Directive (CSDDD), which already applies to companies above the 1,000-employee threshold. To address concerns about transparency, the European Commission suggests introducing a voluntary sustainability reporting standard based on the VSME standard developed by EFRAG. This would provide guidance for businesses that wish to continue disclosing sustainability information even if they are no longer required to do so.

Delay in compliance timelines

• What is being proposed: The Omnibus Simplification Package includes measures to postpone compliance deadlines for both the CSRD and CSDDD. Under the proposal, the reporting requirements for the second and third waves of companies under the CSRD would be delayed by two years. This means affected companies would now begin reporting for financial years starting on or after January 1, 2028, instead of 2026. The stated objective of this delay is to prevent companies from preparing and reporting under CSRD only to be later exempted under the proposed higher threshold, avoiding unnecessary compliance costs. The European Commission has urged legislators to reach a rapid decision on this postponement to provide legal clarity for companies in the second wave.
• For the CSDDD, the proposal includes a one-year delay in both the transposition deadline for member states and the application date for the first wave of companies. The transposition deadline is moved to July 2027, with the first application date set for July 2028. The purpose of this delay is to give companies more time to prepare for their obligations, particularly in light of the forthcoming guidelines from the European Commission. The proposal acknowledges that businesses of different sizes have varying capacities to implement due diligence measures and aims to account for these differences.
• Germany and France, two of the most influential member states in the EU, have publicly called for a delay in compliance deadlines. They argue that SMEs, which may face difficulties in meeting the current deadlines, would benefit from more time to prepare. While their backing is significant, it’s important to note that broader support from other EU member states will be required to secure any changes to the deadlines.

Wasted investments in sustainability reporting

• What is the concern: Many businesses are concerned that the Omnibus Package could undermine legal certainty by potentially reopening sustainability regulations, such as the CSRD, CSDDD, and EU Taxonomy. Companies that have already invested substantial resources in preparing for and complying with these laws fear that the proposed changes could make their efforts feel wasted, resulting in added uncertainty and complexity in implementation. This concern has been raised by major European companies, including Nestlé, Unilever, Mars, and Primark, along with industry associations, urging the European Commission to clarify that the Omnibus Package will not renegotiate the core laws.
• What is being proposed: To address this concern, the proposal emphasizes that the European Commission does not intend to alter the substance of the laws through the Omnibus Package. Instead, it focuses on revising and streamlining the existing regulations without undermining the efforts businesses have already made. For instance, the Commission plans to revise the European Sustainability Reporting Standards (ESRS) through a delegated act, which will be applied to companies required to report starting in 2028 for the 2027 financial year. This revision aims to provide clarity and consistency, allowing businesses to align with the updated standards without negating their past investments.
• Additionally, the proposal allows for the voluntary reporting of sustainability and Taxonomy activities, which could benefit businesses with strong sustainability profiles, giving them a competitive edge in attracting investment without mandatory requirements. By supporting the gradual implementation of these changes and launching initiatives like the “Improving Sustainability Reporting for Businesses” project, the Commission aims to ease the burden on companies, particularly SMEs, and ensure they have the necessary resources to meet the new requirements. These efforts are designed to minimize uncertainty and ensure that businesses’ previous investments are not wasted while providing a clear path forward for future compliance.

Clarifying the current status

The Omnibus Simplification Package is still in the early stages of development, and the current version is just one of many possibilities. The European Commission’s initial outline includes changes like raising the reporting threshold and extending compliance timelines, but these are still under discussion and may change as negotiations progress. Many other political groups in the European Parliament have their own positions on sustainability regulations, and they may propose alternative ideas that could impact the final outcome.

Moreover, decisions in the Council of the EU are not made by the Commission alone. The Council requires a qualified majority to approve any changes, meaning at least 55% of member states, representing 65% of the EU population, must agree. While influential member states like Germany and France have shown support for some of the proposed changes, their backing alone is insufficient to pass these decisions. The EU consists of 27 member states, all of which have a vote, and for any changes to take effect, broader support from other countries is required.

The legislative process is long and complex, with proposals being subject to debate, amendments, and further scrutiny. Although the current discussion centers on the Commission’s proposal, it is important to note that new suggestions may emerge from other political parties, the Council, or even the European Parliament as a whole. As these discussions unfold, there is no certainty yet about which elements of the proposal will be finalized or when they will be implemented.

What businesses should do as sustainability reporting evolves

As discussions around the Omnibus Package continue, companies are reassessing their approach to sustainability reporting. While some may consider delaying their efforts in anticipation of regulatory changes, several factors suggest that maintaining current reporting practices remains essential. To navigate this uncertainty effectively, businesses should take the following steps:

• Continue to invest in sustainability for business benefit: Committing to carbon assessments and a focus on sustainability will be crucial for businesses to map out climate-related risks, improve supply chain resilience and, ultimately, focus on creating long-term value for the business and its shareholders.
• Maintain current reporting practices: Until any regulatory changes are formally adopted, companies are expected to maintain their current sustainability reporting obligations. Delaying compliance efforts could risk non-compliance, as the timeline of the legislative process is uncertain. Companies that fail to comply may face legal penalties, such as fines, imposed by national authorities under the CSRD. These penalties will vary depending on national laws, but failure to meet reporting obligations could lead to significant financial and reputational consequences. In addition to fines, companies may face restrictions on access to EU funding or investment, further impacting their market position.
• Monitor legislative developments: Keep a close eye on the progress of the Omnibus Package and other regulatory changes. Staying informed on evolving timelines and proposals will allow businesses to adjust their strategies when necessary, ensuring they’re prepared for any new requirements or deadlines.
• Invest in transparency and stakeholder communication: Regardless of potential regulatory changes, sustainability remains a key factor for investors, business partners, and consumers. By maintaining strong transparency in environmental, social, and governance (ESG) reporting, businesses can meet stakeholder expectations and maintain their competitive advantage.