The Omnibus Proposal introduced by the European Commission brings significant changes to two of the EU’s most crucial sustainability regulations—the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Designed to simplify and reduce the reporting burden on businesses, this proposal directly impacts the timelines and requirements for sustainability reporting and due diligence compliance. As companies across Europe adapt to an increasingly complex regulatory environment, these changes provide a much-needed opportunity to streamline processes, reduce costs, and better align with the EU’s long-term sustainability goals. In this blog, we’ll explore how the Omnibus Proposal affects the CSRD and CSDDD, what it means for businesses, and the steps you need to take to stay on top of these new regulations.
The Omnibus Proposal is a legislative package put forward by the European Commission with the goal of simplifying sustainability regulations for businesses across the EU. Its main focus is to reduce the reporting burden on companies, particularly in the areas of corporate sustainability reporting and due diligence, without compromising the environmental and social objectives of the European Green Deal.
The proposal is part of a broader effort to make the regulatory framework more manageable for businesses, especially amidst global challenges such as rising energy prices and shifting geopolitical landscapes. The Commission aims to enhance competitiveness by easing administrative complexities, thus giving businesses—especially small and medium-sized enterprises (SMEs)—more time and flexibility to adapt to sustainability requirements.
For companies subject to the CSRD and CSDDD, the Omnibus Proposal introduces significant adjustments, including delays in compliance deadlines, which are designed to help companies avoid unnecessary costs and burdens. By aligning the timeline and requirements more closely with the business realities of today, the Omnibus Proposal helps ease the transition to more sustainable operations while still achieving the overarching goals of transparency, accountability, and social responsibility.
The Corporate Sustainability Reporting Directive (CSRD) is an EU regulation requiring large companies to disclose detailed sustainability information on environmental, social, and governance (ESG) issues. Aimed at increasing corporate transparency, it applies to large public interest entities, listed SMEs, and certain non-EU companies with significant EU operations. The directive sets mandatory European Sustainability Reporting Standards (ESRS) for reporting.
Recent updates to the CSRD focus on reducing the reporting burden, particularly for smaller companies, while ensuring robust sustainability disclosures. Here's a summary of the key changes in the proposal.
The CSRD applies to different categories of undertakings in phases, based on their size and type of business:
The new proposal aims to reduce the number of companies required to report by about 80%. It excludes:
This revised scope aligns more closely with the Corporate Sustainability Due Diligence Directive (CSDDD), ensuring that only the largest companies are subject to the full reporting obligations. Smaller businesses, particularly those with fewer than 1000 employees, will face reduced reporting requirements, minimizing the cost and complexity of compliance.
For companies not covered by the mandatory CSRD requirements, the Commission is proposing a voluntary, proportionate reporting standard. This will be based on the VSME (Voluntary Sustainability Reporting for SMEs) standard developed by EFRAG. This standard provides a simple, widely recognized tool for SMEs to report sustainability information to stakeholders, including banks and large companies, without being burdened by the full CSRD requirements.
A major concern in the original CSRD was the potential "trickle-down" effect, where large companies would impose reporting obligations on their smaller suppliers, creating additional burden for SMEs. To address this, the proposal strengthens the value-chain cap, limiting how much information larger companies can require from SMEs in their supply chains. This ensures that companies with up to 1000 employees will not be forced to gather excessive sustainability data from smaller businesses, thus reducing the reporting pressure on SMEs.
The proposal calls for revisions to the European Sustainability Reporting Standards (ESRS) to simplify and streamline the reporting process. Key changes include:
These changes aim to make sustainability reporting more efficient while still ensuring it remains consistent with global standards.
To give businesses more time to adjust to the new rules, the proposal suggests postponing the start of the reporting requirements for the second and third waves of companies by two years. This will:
This delay ensures that businesses do not incur unnecessary costs if they are later exempted from reporting obligations, providing more flexibility for companies to transition smoothly into the new regulatory environment.
The revised proposal clarifies the assurance requirements for sustainability reporting. While the original CSRD suggested a future shift from limited assurance to reasonable assurance, the updated proposal removes this potential shift, maintaining the current requirement for limited assurance in the near future. This decision eliminates the risk of companies facing higher assurance costs. Additionally, the Commission plans to issue targeted assurance guidelines by 2026 to address emerging issues and provide clarity on the assurance process.
For large undertakings with more than 1000 employees, the proposal introduces an "opt-in" regime for companies claiming partial alignment with the EU Taxonomy. Companies with turnover up to EUR 450 million can opt to disclose their turnover and CapEx Key Performance Indicators (KPIs) without the full compliance burden. This flexibility helps companies gradually transition to meeting the EU Taxonomy criteria without the upfront costs of full alignment, supporting the broader goal of scaling up transition finance.
The changes to the CSRD aim to simplify sustainability reporting, particularly for smaller companies, while ensuring compliance with the EU’s sustainability goals. By adjusting reporting requirements, introducing voluntary standards, and reducing data points, the proposal makes compliance easier and less complex. The value-chain cap and opt-in Taxonomy regime further protect smaller businesses from excessive reporting burdens, making the CSRD more accessible to companies of all sizes.
The Corporate Sustainability Due Diligence Directive (CSDDD) aims to ensure that companies take responsibility for human rights and environmental impacts across their value chains. It introduces mandatory due diligence obligations for companies to identify, prevent, and mitigate risks related to human rights violations and environmental damage. The CSDDD will be implemented in phases to ensure a proportional approach based on company size and capacity.
The rules under the CSDDD will apply in three phases:
This phased implementation is designed to give businesses of different sizes enough time to adjust and comply, recognizing that larger companies have more resources to handle the obligations.
The proposal includes a one-year delay for the first wave of companies to prepare for their obligations under the CSDDD. This delay allows companies to get ready, considering the guidelines set out by the Commission and potential amendments to the Directive in the parallel simplification proposal. Additionally, the deadline for Member States to transpose the Directive will also be extended by one year to account for potential delays in their efforts.
For companies that are subject to the CSRD, the CSDDD requires them to report specific sustainability indicators, especially those related to environmental and social impacts. The postponement of the CSDDD obligations will also delay the timeline for these companies to report under the Taxonomy Regulation, ensuring consistency between the CSRD and CSDDD reporting requirements.
The reporting under both the CSRD and CSDDD will be aligned, with no additional information required by the CSDDD that isn’t already covered by the CSRD. This consistency ensures that companies won't face overlapping or redundant reporting requirements.
This proposal aligns with broader EU goals to enhance competitiveness and simplify the regulatory framework while achieving the objectives of the Green Deal. By reducing the regulatory burden, especially for smaller businesses, the proposal maintains a balance between ensuring companies meet sustainability standards and allowing them the flexibility to comply without undue strain. This approach helps integrate sustainability into business operations, contributing to long-term competitiveness and environmental goals.
The changes to the CSDDD introduce a phased approach to compliance, with deadlines tailored to company size. A one-year delay for the first wave of companies allows more preparation time. The proposal also ensures consistency with the CSRD and Taxonomy Regulation, reducing the reporting burden and providing clarity for businesses. The updates align with broader EU policies to simplify regulations while supporting sustainability goals and long-term competitiveness.
With the Omnibus Proposal delaying key compliance deadlines for CSRD and CSDDD, businesses now have valuable time to prepare strategically rather than rushing to meet requirements. While the delays reduce immediate compliance pressure, they should be used wisely to enhance reporting capabilities, integrate due diligence processes, and align internal strategies with the evolving EU sustainability framework. Here’s what businesses should focus on:
The postponement of CSRD and CSDDD reporting deadlines gives companies more time to refine their compliance strategies, strengthen internal sustainability frameworks, and implement effective governance structures for sustainability and due diligence obligations.
Key actions for businesses:
Why this matters: The Omnibus Proposal prevents companies from making unnecessary compliance investments only to face revised requirements later. Instead, they can use this time to build sustainable, long-term compliance strategies that align with evolving EU standards.
The Omnibus Proposal not only delays reporting deadlines but also introduces revisions to the European Sustainability Reporting Standards (ESRS). The European Commission will issue a revised ESRS framework, reducing the number of mandatory disclosures and simplifying complex reporting obligations.
Key actions for businesses:
Why this matters: Instead of preparing for ESRS requirements that may change, businesses can wait for the streamlined framework and tailor their reporting processes accordingly, reducing unnecessary compliance burdens.
The Omnibus Proposal is part of a broader EU effort to reduce administrative burdens and make sustainability compliance more manageable for businesses. However, the final details of the revised sustainability framework are still being shaped—and businesses can influence these decisions by actively participating in stakeholder discussions.
Key actions for businesses:
Why this matters: Businesses that actively engage in the regulatory process can shape the final sustainability reporting framework to ensure that it remains practical, proportionate, and aligned with real-world business needs.
While the Omnibus Proposal delays sustainability reporting and due diligence requirements, it does not eliminate them. Instead, it provides companies with a critical window to prepare for compliance in a structured and cost-effective manner. By leveraging this additional time to refine reporting processes, track ESRS revisions, and engage with regulatory bodies, businesses can ensure they are well-positioned to meet the new sustainability and due diligence obligations without disruption or excessive costs.
The companies that use this delay proactively will not only avoid compliance headaches later but also position themselves as leaders in sustainable and responsible business practices—a key advantage in today’s evolving regulatory and market landscape.
