Updates from Omnibus Package: EU to Begin Scaling Back Sustainability Requirements
Here’s what you need to know about the proposed changes to CSRD, CSDDD, and the EU Taxonomy.
A newly proposed Omnibus Package by the European Commission (EC) introduced on February 26, 2025, has highlighted significant changes to three key sustainability regulations: the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy Regulation. Aiming to simplify EU climate regulations, reduce administrative burdens, and address concerns about regulatory complexity, the EC’s proposal narrows the scope of affected businesses, delays compliance deadlines, and introduces voluntary reporting options for smaller companies. In this post, we outline some of the key takeaways from the proposal. The legislative proposals will now be submitted to the European Parliament and the Council for consideration and adoption.
Proposed CSRD Changes
The proposed changes to the CSRD—which requires companies within the scope of the law to report their environmental, social, and governance impact—include the following:
- Only companies with 1,000+ employees (previously this number was 250+), €50 million turnover, or €25 million of assets in balance sheet would be subject to mandatory sustainability reporting), cutting the number of affected companies by 80%.
- Reporting deadlines for companies initially required to report in 2026 and 2027 would be pushed back by two years, allowing more time for preparation.
- A voluntary ESG reporting standard would be introduced for companies with fewer than 1,000 employees, enabling smaller businesses to disclose sustainability data without mandatory compliance.
Proposed CSDDD Changes
The proposed changes to the Corporate Sustainability Due Diligence Directive (CSDDD)—which requires that companies identify and mitigate social and environmental risks in their supply chains—include the following:
- Companies would only be required to monitor direct suppliers, reducing the compliance burden on businesses with complex supply chains.
- Supply chain impact assessments would occur once every five years (instead of annually) for companies with 500+ employees.
“If you need help understanding how these changes impact your business, we’re here for you. We specialize in helping companies navigate complex sustainability challenges, including aligning with evolving EU sustainability regulations.”
Pankaj Tanwar, Managing Director of Climate Services
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Proposed EU Taxonomy Changes
The proposed changes to the EU Taxonomy Regulation—which establishes criteria for defining environmentally sustainable economic activities—include the following:
- Sector-specific sustainability reporting standards would be eliminated, making the framework more uniform across industries.
- The number of data points required in Taxonomy templates would be reduced by 70%, streamlining reporting.
- Companies would be exempt from reporting on activities that are financially immaterial (representing less than 10% of turnover, capital expenditure, or total assets).
- Businesses within the future scope of CSRD could voluntarily report Taxonomy alignment instead of facing a mandatory requirement.
Conclusion
The EC’s Omnibus proposal is an effort to simplify EU sustainability reporting requirements and better align across all EU sustainability legislation. The revisions aim to be pragmatic and address pain points and confusion in existing laws. While the overarching goal remains to reduce carbon emissions in the most effective way possible, the proposed changes acknowledge the need for further clarification and simplification to achieve that goal.
If you need help understanding how these changes impact your business, we’re here for you. We specialize in helping companies navigate complex sustainability challenges, including aligning with evolving EU sustainability regulations. Additionally, while CSRD reporting and its requirements have been delayed, double materiality remains a critical component of CSRD and will need to be performed to be ready for reporting. Contact us today to get started.
The EC’s Omnibus Proposal is a set of proposed amendments to the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy Regulation. It aims to simplify sustainability reporting requirements, reduce administrative burdens, and address concerns about regulatory complexity while still supporting corporate climate action.
Under the proposal, only larger companies (1,000+ employees, €50 million turnover) would be required to comply with CSRD reporting, which would reduce the number of affected companies by 80%. Additionally, companies originally scheduled to start reporting in 2026 and 2027 would receive a two-year extension to meet their obligations.
The proposed changes to the CSDDD significantly reduce supply chain due diligence requirements. Companies would no longer need to assess their entire supply chain but instead focus only on direct suppliers. Additionally, businesses with at least 500 employees would not be required to conduct annual supply chain assessments. Instead, they would only need to review supplier impacts once every five years. While these changes are intended to reduce compliance burdens, they may limit visibility into the broader environmental and social risks within extended supply chains.
The EU Taxonomy Regulation would be modified to make sustainability reporting more manageable. One major change is the removal of sector-specific reporting standards, allowing for a more consistent framework across industries. The total number of required data points would also be cut significantly, reducing the complexity of compliance. Additionally, companies would no longer need to report on financially immaterial activities—those that account for less than 10% of their turnover, capital expenditure, or total assets. For companies that will fall under future CSRD requirements, reporting on Taxonomy alignment would become voluntary rather than mandatory. These adjustments are designed to streamline sustainability reporting while still maintaining key disclosure requirements.
Companies should stay informed about the final decision on these proposals and evaluate how the changes impact their reporting obligations. Businesses still subject to reporting requirements should develop clear sustainability strategies to ensure compliance. CarbonBetter can help businesses navigate evolving EU regulations and implement effective sustainability reporting frameworks.
About the Author
Pankaj Tanwar is Managing Director of Climate Services at CarbonBetter. He has experience leading Fortune 100 companies through their sustainability journeys, including sustainability driven growth in the food industry. Pankaj holds an MBA from Northwestern University’s Kellogg School of Management and a BTech in Mechanical Engineering from the Indian Institute of Technology, Kanpur.
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