The European Union’s Omnibus Simplification package, promoted as a way to simplify and reduce sustainability reporting requirements, was passed by the European Parliament on April 3rd (2025).

It has raised concerns among a range of business interests, who are unsure of the long-term benefits of the changes that they view as undermining sustainability reporting standards and weakening key policies, particularly around climate action and human rights. 

The rule changes under Omnibus delay reporting timelines for the EU’s Corporate Sustainability Reporting Directive (CSRD) by two years and grant a one-year extension for the transposition and application of the Corporate Sustainability Due Diligence Directive (CSDDD). (1)

The package was launched in February and agreed without revisions by the European Council on March 26th and sent to the European Parliament with a request for urgent procedure. Fast track was approved on April 1st with the deciding vote carried on April 3rd.

Reducing burden on business

The overall aim of the package is to reduce administrative burdens by 25%, and by 35% for small and medium-sized businesses, by the end of the Commission’s mandate in 2029.

Omnibus will remove around 80% of companies from the scope of CSRD, focusing the sustainability reporting obligations on the largest companies which are more likely to have the biggest impacts on people and the environment;

The rapid reshaping of corporate sustainability and due diligence rules was completed without amendments. The original CSDDD rules had been approved in May last year but will now come into effect no earlier than 2028 – a delay of at least a year beyond the schedule. Other sustainability reporting rules will be delayed by at least two years.

The European Commission (EC) proposed the Omnibus package in February 2025, and included also includes changes to the EU Taxonomy, which defines sustainable economic activities, as well as to the CSRD and CSDDD.

The Commission aims to reduce administrative burdens for businesses, advising that the new rules would cut red tape and simplify EU rules for business and citizens. The package follows publication in January of the Competitiveness Compass framework, when the Commission unveiled ideas to make the EU economy more prosperous and competitive. (2)

This focused on the need to regain competitiveness and unleash growth, through the reinforcement of a favourable business environment which ensures that companies can thrive. 

Omnibus objectives

• Simplify and streamline: The package aims to reduce complexity by amending and clarifying key sustainability regulations, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy. 

• Reduce administrative burden: The goal is to ease the compliance burden on businesses, particularly small and medium-sized enterprises (SMEs), by reducing the number of companies in scope and making it easier for those that remain in scope to comply. 

• Boost competitiveness: By streamlining regulations and reducing administrative costs, the package aims to enhance the competitiveness of EU businesses. 

• Unlock investment capacity: The simplification efforts are intended to unlock additional investment capacity in the EU. 

The package includes amendments to the CSRD to simplify reporting requirements and make them more proportionate to the size and complexity of businesses. It also addresses the CSDDD, aiming to streamline the due diligence framework and reduce the administrative burden associated with it. 

Omnibus also includes proposals to simplify the EU Taxonomy, which classifies sustainable economic activities. A financial materiality threshold for taxonomy reporting exempts large undertakings with a large variety of activities from assessing compliance with the technical screening criteria of non-material economic activities. 

The Omnibus package also addresses the Carbon Border Adjustment Mechanism (CBAM), aiming to ease requirements for smaller importers, specifically for SMEs and authorities. At the same time it simplifies rules related to European investment programmes, such as InvestEU. 

Streamlined rules

EC President Ursula von der Leyen advised: “EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy. This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way.3”

The Omnibus changes aim to bring total savings in annual business administrative costs of around €6.3 billion and to mobilise additional public and private investment capacity of €50 billion to support policy priorities. (3)

Business groups reaction

A joint statement by three leading European investor membership bodies, supported by more than 200 investors and other financial sector actor with a combined €6.6 trillion assets under management, sounded a strong warning. (4)

The statement from the European Sustainability Investment Forum (Eurosif), the Institutional Investors Group on Climate Change (IIGCC) and the UN Principle for Responsible Investment (PRI) said: “Reopening these regulations in their entirety risks creating regulatory uncertainty and could ultimately jeopardise the Commission’s goal to reorient capital in support of the European Green Deal.”

The investor groups advised that the move was likely to create legal uncertainty, jeopardise Europe’s long-term economic competitiveness and harm investment.

They said that the EU sustainability regulations were “fundamental cornerstones of the EU’s sustainability policy architecture”, crucial for fostering long-term sustainability and economic growth in Europe.

The previous rules would have helped investors make informed decisions to “manage risks, identify opportunities and ultimately reorient capital towards a more competitive, equitable, and prosperous net-zero economy.”

The joint statement recognised the need for targeted improvements but emphasised the importance of long-term policy stability and highlighted the dangers of wholesale reopening of the three laws that could lead to a significant weakening of corporate sustainability disclosures which were essential for investment decisions. (4)

Cost burdens

At the same time, the Institute for Energy Economics and Financial Analysis (IEEFA) argued that the Commission view on cost burdens for companies was overstated and quoted the European Financial Reporting Advisory Group(EFRAG). (5)

EFRAG advised that CSRD compliance might cost just 0.004% to 0.008% of company turnover and CSDDD marginally more expensive at 0.01% of turnover. In the latter case, it accounted for as little as 0.13% of profits distributed to shareholders. (6)

IEEFA advised that in its view, the benefits of sustainability reporting had been largely ignored, while the package positioned sustainability as solely a cost centre for companies. It said that potential benefits to companies were significant and included:

1. Enhanced risk management capability 

2. Greater awareness of operational inefficiencies 

3. Enhanced reputation and brand value 

4. Ability to attract and retain talent 

5. Greater innovation 

6. Benefits associated with stronger stakeholder relationships 

7. Improved investor confidence and access to capital. (4)

Bibliography

1 “Commission proposes to cut red tape and simplify business environment” (Accessed April 2025) https://commission.europa.eu/news/commission-proposes-cut-red-tape-and-simplify-business-environment-2025-02-26_en

2 “A new plan for Europe's sustainable prosperity and competitiveness” (Accessed April 2025) https://commission.europa.eu/priorities-2024-2029/competitiveness_en

3 “Commission simplifies rules on sustainability and EU investments, delivering over €6 billion in administrative relief” (Accessed April 2025) 3https://ec.europa.eu/commission/presscorner/detail/en/ip_25_614

4 “Investors warn Omnibus package could weaken EU sustainability disclosures, harming investment and economic competitiveness” (Accessed April 2025) https://www.iigcc.org/media-centre/investors-warn-omnibus-package-could-weaken-eu-sustainability-disclosures-harming-investment-and-economic-competitiveness

5 “EU Omnibus ‘stop-the-clock’ proposal: A call for compromise” (Accessed April 2025) https://ieefa.org/resources/eu-omnibus-stop-clock-proposal-call-compromise

6 “Draft European Sustainability Reporting Standards” (Accessed April 2025) https://www.efrag.org/sites/default/files/sites/webpublishing/SiteAssets/05%20EFRAGs%20Cover%20Letter%20on%20the%20Cost-benefit%20analysis.pdf