Omnibus: Implications for Due Diligence Reporting
What is Omnibus about? What are its implications?
The EU is shaking up its sustainability laws by putting forward the Omnibus package. This complex legislative bundle is making waves, and for good reason. It’s poised to reshape how businesses approach sustainability, reporting, and responsible business conduct across the European Union.
While many companies may get a temporary break, the overall regulatory landscape is shifting – and these changes could dramatically affect your company’s future obligations. So, let’s break it down.
What is the EU Omnibus Package and Why is it Important?
The EU Omnibus Package refers to a set of legislative proposals introduced by the European Commission on February 26, 2025. It’s called “Omnibus” because it bundles together a wide array of updates and amendments across different EU regulations and directives. Think of it like a massive policy overhaul rolled into a single legislative package. It is, indeed, a substantial amount of information to process.
The package includes Omnibus I, Omnibus II, and Omnibus III, each targeting specific areas of EU legislation. The key directives and acts impacted include:
- Omnibus I. Released on February 26, 2025, it addresses sustainability due diligence simplification, including:
- the Corporate Sustainability Reporting Directive (CSRD),
- the Corporate Sustainability Due Diligence Directive (CSDDD),
- the Carbon Border Adjustment Mechanism (CBAM),
- and the EU Taxonomy Regulation.
- Omnibus II. Also released on February 26, 2025, it deals with amendments and simplification of Investment Programmes.
- Omnibus III. Scheduled for release in Q2-2025, it will impact small mid-cap (medium capitalisation) companies.
These reforms aim to simplify, clarify, and streamline existing sustainability and finance regulations, in an attempt to increase coherence and synergy among them. But depending on whom you ask, it’s either a welcomed simplification or a dangerous deregulation.
When will the EU Omnibus Come Into Force?
The proposed package’s release date was February 26, 2025, and it’s now being hotly debated ahead of a vote scheduled for April 1, 2025. Businesses, regulators, and civil society are all weighing in on what this means for the EU’s sustainability ambitions.
The postponements will likely be easier to approve, even taking advantage of the “fast track” procedure. On the other hand, any changes to the CSRD and CSDDD might require some time and necessitate in-depth discussions.
Other regulations, such as the EUDR, the Forced Labour Regulation, and the Battery Regulation, are not directly impacted by the Omnibus package, and there has not been any communication from EU institutions or spokespeople about possible amendments to these topics.
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What does the Omnibus mean for Sustainability Reporting?
At its core, the EU Omnibus Package seeks to balance the need for clear, actionable sustainability regulations with the business community’s call for reduced complexity and reporting burdens. Whether it strikes that balance remains to be seen. However, one thing is clear: this package could reshape Europe’s sustainability landscape for years to come.
This article will focus on the CSRD, the CSDDD, the CBAM, and the EU Taxonomy Act, with Omnibus I as the central topic. These pieces of legislation form an integrated system and represent the underlying framework for sustainability and due diligence reporting in Europe.
Omnibus I presents compelling measures to “stop the clock”, an approach adopted by the EU Commission to freeze the CSRD and CSDDD for one or two years – hence extending the adaptation period while trying to reduce the administrative burdens. In addition, the proposal already requests important changes to the due diligence requirements.
Omnibus Influences on the Corporate Sustainability Reporting Directive (CSRD)
The Corporate Sustainability Reporting Directive (CSRD) has been one of the EU’s flagship pieces of legislation aimed at boosting corporate transparency around sustainability. Due to its original timeline, it has already been adopted by some Member states. Since its introduction, it has also been a source of stress for many businesses trying to understand what, when, and how to report.
Scope & Threshold Changes
Currently, the CSRD enforcement is structured in four waves, which differentiate among themselves based on their scope and timelines.
Omnibus I proposes to narrow the scope of the CSRD, focusing reporting obligations on larger companies and high-risk sectors. The objective is to free smaller businesses from overly complex sustainability reporting requirements. Under the proposed changes, companies with fewer than 500 employees may see relaxed obligations, particularly if they are non-listed SMEs. This would imply a scope reduction of 80%.
The timeline for implementation is also being revised. While the original CSRD phased in reporting starting from 2025 for companies in Wave 2 and 3, Omnibus I pushes back these deadlines by two years. For many companies, the first reports under the CSRD may not be due until 2026, giving businesses more time to prepare and align their reporting processes. Let’s analyse each wave and examine how they are expected to change with Omnibus I.
Wave 1
- Scope: Large undertakings or parent companies of large groups with more than 500 employees, a balance sheet of more than €20 million, and an annual turnover of more than €40 million. This cluster is already subject to the Non-Financial Reporting Directive (NFRD).
- Timeline: Organisations are obligated to report in 2025 concerning the 2024 data.
For these entities, the Omnibus will not have any effect, meaning that this year they will still be required to report for 2024, and will continue to do so in subsequent years.
Wave 2
- Scope: Other large companies exceeding 250 employees and €50 million turnover or €25 million in the balance sheet.
- Timeline: Organisations are obligated to report in 2026 for the year 2025.
The Omnibus changes the scope by raising these thresholds and updates the timeline. The proposed new thresholds and timelines are:
- New Scope: Other large undertakings and parent undertakings of a large group with more than 1000 employees and €50 million turnover or €25 million balance sheet. According to the proposal, to be classified within this cluster, organisations need to surpass the 1000-employee threshold and fulfil one of the other two conditions.
- New Timeline: Organisations will execute the first report in 2028 for the year 2027.
Wave 3
- Scope: Listed SMEs that do not exceed two conditions among having 250 employees, €25 million balance sheet, or €50 million turnover.
- Timeline: Organisations are obligated to report in 2027 for the year 2026.
The Omnibus eliminates this cluster from the directive’s influence:
- New Scope: Omnibus plans to exclude SMEs from sustainability reporting.
- New Timeline: Based on Omnibus, these types of companies will no longer need to report according to CSRD.
Wave 4
- Scope: Non-EU enterprises with more than €150 million turnover generated within the EU and having either a large EU subsidiary or EU branches generating more than €40 million turnover in the EU.
- Timeline: Organisations will execute the inaugural report in 2029 for the year 2028.
For non-EU enterprises, Omnibus once more raises the threshold but keeps the timeline unmodified:
- New Scope: Non-EU enterprises with more than €450 million turnover generated within the EU and having either a large subsidiary (please consult above the criteria introduced by Omnibus) or an EU branch generating more than €50 million turnover in the EU. No reference to an employee threshold appears in the proposal.
- New Timeline: For non-EU enterprises, the proposal does not change the reporting timeline, which remains set for 2029 for the year 2028.
The proposal stipulates that all organisations no longer subject to CSRD can still submit CSRD reports on a voluntary basis. Nevertheless, such a shift could significantly diminish the number of companies falling under mandatory reporting.
Likely, larger companies have already started working on CSRD in preparation for the application deadline, as they were supposed to report on corporate sustainability KPIs for 2025. This situation might create frustration and inefficiencies for them as it remains unclear whether the Omnibus will be approved or rejected.
Content Changes
Value Chain (Art. 19a para 3, 29a para 3)
Current Provision: Organisations are mandated to gather information on ESG performance across their entire value chain, including direct and indirect commercial relationships, and report on it. Data collection can occur through questionnaires or similar tools.
With Omnibus: Organisations are not authorised to get in contact with any indirect business partners for collecting sustainability data unless the tier-n supplier has more than 1,000 employees.
Even in case they can contact their tier-n suppliers, they cannot force them to disclose any additional information than the one delineated in the new voluntary standard for out-of-scope organisations based on the EFRAG Voluntary Sustainability Reporting Standard for SMEs, or the supplementary sustainability information that is commonly communicated between organisations in the sector concerned.
Implications & Motives: The amendment would transform how data collection is conducted, creating space for assumptions and conjectures, thereby creating substantial uncertainty among stakeholders and potential grey zones for organisations seeking to circumnavigate the legislation.
It also drastically diminishes the authority of enterprises affected by CSRD over smaller suppliers, which are no longer compelled to comply with EU regulatory standards.
The approach aims to decrease the burden for SME suppliers and other out-of-scope organisations, particularly those in foreign territories.
Upcoming sector-specific standards (Art. 29b)
Current Provision: The Commission was supposed to issue sector-specific sustainability reporting standards (ESRS).
With Omnibus: Sector-specific standards (ESRS) would no longer be mandated.
Implications & Motives: Such standards had not yet been issued, which makes it challenging to foresee whether the manoeuvre will exercise a positive or negative impact.
EU Taxonomy (Art. 19b, Art. 29a)
Current Provision: All organisations subject to CSRD was also mandated to report on principles dictated by Article 8 of the EU Taxonomy.
With Omnibus: Organisations with >1000 employees and up to €450 million turnover are no longer mandated to report on such principles. However, organisations with >1000 personnel and also >€450 million in turnover would still be compelled to report under the EU Taxonomy.
Implications & Motives: The proposal offers a simplification for organisations with lower turnover, although it also limits its impact to a comparatively small group of businesses.
Datapoints for reporting
Current Provision: There exist more than 1,000 data points in the initial set of ESRS, spanning from qualitative to quantitative items.
With Omnibus: With a delegated act, the EU Commission plans to amend the first set of ESRS, aiming to provide clarity and legal assurance regarding what will be required. This will be accomplished by decreasing the number of mandatory data points and shifting their focus towards quantitative data.
Implications & Motives: The reduction in data points will certainly mitigate the administrative burden, although it remains uncertain whether the modification might also influence the directive’s effectiveness. It will depend on the change extent in terms of quantity and substance.
Double materiality evaluation
Despite numerous speculations about a potential change, the double materiality concept is preserved as is in the Omnibus proposal. But what does it mean?
The CSRD introduced the concept of double materiality, which broadens the conventional perspective of materiality in corporate reporting. Here’s its interpretation:
- Impact Materiality (Inside-Out Perspective): This pertains to the influence the organisations exercise on individuals and the environment. Organisations must report on how their operations, products, and commercial relationships affect broader sustainability matters, such as climate change, human rights, and biodiversity.
- Financial Materiality (Outside-In Perspective): This constitutes one of the foundational principles in NFRD and encompasses how sustainability matters influence the organisations’ financial performance and status. For instance, climate risks (such as regulations or physical climate occurrences) may affect an organisations’ assets, liabilities, or overall profitability.
Under double materiality, organisations are mandated to contemplate both perspectives in their sustainability reporting.
Omnibus Influences on the Corporate Sustainability Due Diligence Directive (CSDDD)
The Corporate Sustainability Due Diligence Directive (CSDDD) has constituted a pivotal component in the European Union’s initiatives to foster responsible commercial practices throughout supply chains.
The Omnibus I establishes a phased implementation approach for CSDDD to ensure proportional application based on company size and capacity. Member states must transpose the Directive by July 26, 2026, with companies becoming subject to the rules in three waves:
Wave 1
- Scope: EU companies with over 5,000 employees and more than €1.5 billion turnover, as well as non-EU companies with more than €1.5 billion EU turnover.
- Timeline: From July 2027.
Wave 2
- Scope: EU companies with over 3,000 employees and more than €900 million turnover, as well as non-EU companies with more than €900 million turnover.
- Timeline: From July 2028.
Wave 3
- Scope: EU companies with over 1,000 employees and more than €450 million turnover, as well as non-EU companies with more than €450 million turnover.
- Timeline: From July 2029.
The three waves will eventually bring the total number of impacted organisations to approximately 6,000 EU companies and 900 non-EU companies.
Content Changes
Stakeholders (Art. 3 para. 1n)
Current Provision: It currently mandates that the term “stakeholders” includes the organisations’ employees, employees of its subsidiaries, employees of its business partners, trade unions, workers’ representatives, consumers, other individuals, groups, communities, or entities whose rights or interests are or could be affected, national human rights and environmental institutions, and civic society organisations.
With Omnibus: Consumers, national human rights and environmental institutions, and civic society organisations are no longer considered “stakeholders” and are out-of-scope of the directive.
Implications & Motives: The impact is limited as the most significant stakeholders remain, including employees and workers in the supply chain. However, the fact that certain groups were excluded could lead organisations to disregard certain drawbacks of their operations.
Level of harmonisation (Art. 4)
Current Provision: Member states cannot deviate from provisions regarding risk assessment, and preventive and remedial measures, which guarantees complete harmonization.
With Omnibus: The harmonisation is extended to additional elements related to due diligence support at the group level, the identification and assessment of actual and potential adverse impacts, the prevention of potential adverse impacts, the resolution of actual adverse impacts, and the complaints notification mechanism.
On top of that, member states could still have the option to adopt more stringent or specific requirements in other areas.
Implications & Motives. This provision ensures that member states do not create a fragmented regulatory landscape that results in legal uncertainty and unnecessary administrative burdens.
Identifying and assessing actual and potential adverse impacts (Article 8, par. 2a)
Current Provision: Companies do not have constraints on information gathering from business partners.
With Omnibus: Companies cannot collect data from direct business partners with less than 500 employees during risk mapping (para. 2a).
Implications & Motives: It remains ambiguous why contact is prohibited exclusively in the initial stage, “risk mapping”, and not additionally in the subsequent stage “in-depth assessment.”
Current Provision: The in-depth assessments can be conducted across the organisations’ own operations, its subsidiaries, direct business partners, and indirect business partners.
With Omnibus: Companies willing to execute risk assessments over indirect business partners must possess “plausible information” suggesting that adverse impacts have materialised or may materialise.
Implications & Motives: This provision heavily limits the focus mainly on the Tier-1 suppliers and only in exceptional cases over the Tier-N suppliers, in an attempt to reduce the administrative burden on SMEs.
It seems that the use of broader approaches, i.e. sending our questionnaires, would no longer be used for Tier-N suppliers during the risk analysis stage.
The definition of “plausible information” is unclear, although it can be assumed that relates to demonstrated negative impacts highlighted by reports, media sources, governmental or NGO studies, CSRD findings in the value chain, official news, and public investigations, e.g. Earthsight.
Preventing potential adverse impacts & Bringing actual adverse impacts to an end (Art. 10, Art. 11)
Current Provision: Organisations must terminate the business relationship with their associates in case the prevention action plan is not workable.
With Omnibus: Organisations are not mandated to terminate the business relationship, but rather to suspend it, in terms of not initiating new relations and not extending existing ones in case the prevention action plan proves to be inappropriate.
Implications & Motives: In general, it is more likely that organisations would terminate the relationship earlier in the due diligence process to avoid implementing extensive measures subsequently. Furthermore, organisations can still terminate the contract if they see it necessary; they are merely not obligated to do so by CSDDD.
Such change is motivated by several factors. First, the mandatory termination of contracts is not entirely mirrored in international standards. For instance, the OECD never mentions it. Second, due diligence should concentrate on making the best efforts to mitigate risks, rather than adopting a cut-and-run methodology. If this directive is primarily referring to forced labour scenarios, a Forced Labour Act has been recently enacted, so the matter is already addressed by EU Law.
Monitoring (Art. 15)
Current Provision: The monitoring of the adequacy and effectiveness of the CSDDD is required at least every 12 months.With Omnibus: The monitoring will exclusively be mandated at least every 5 years.
Combating climate change (Art. 22)
Current Provision: Organisations must adopt and “put into effect” a climate transition plan explaining the steps towards more sustainable standards.
With Omnibus: The phrasing has been swapped with a note highlighting that adopting a climate transition plan includes outlining the planned and taken actions (the obligation to “put into effect” the plan is no longer mentioned).
Implications & Motives: The transition plan for climate change mitigation is already accomplished through compliance with CSRD, and authorities were already exclusively empowered to supervise the adoption and design of transition plans (Art. 25 para. 1). However, the Commission should provide further explanations to avoid the ambiguity that might enable organisations to plan the transition without actually executing it.
Penalties (Art. 27)
Current Provision: The maximum penalty must be at least 5% of the annual global turnover.
With Omnibus: The Omnibus does not provide guidance anymore. Penalties will be a matter for member states to determine. Implications & Motives: The Commission declares that penalties shall be effective, proportionate, and dissuasive, which might be a sufficient guideline for member states to establish a satisfactory penalty framework.
Civil liability of companies and the right to full compensation (Art. 29)
Current Provision: Civil liability is feasible exclusively in scenarios of intentional or negligent behaviour, non-compliance with preventive or remedial measures, or causality between the detriment and the organisations’ misconduct. This implies that the CSDDD and civil liability principles also apply in scenarios where harm materialises in third countries.
With Omnibus: Civil liability would be feasible exclusively under national law, which eliminates the obligation for Member states to guarantee litigation on another’s behalf, as well as the international mandatory application. This implies that the law of that nation applies exclusively.
Implications & Motives: Although the thresholds for liability under the CSDDD were already high, the impact of the directive would decrease as in some countries it is less likely that a company will be liable due to more loosened legislation, which would limit the access to justice for actual victims as non-EU victims cannot bring matters to EU court.
There is no explicit mention that a violation of the obligations under the CSDDD does not give rise to liability, which could generate some uncertainty and ambiguousness. The previous text ensured harmonisation across member states by setting clear conditions defining civil liability breaches. Such a harmonising aspect is now missing.
Review and reporting (Art. 36)
Current Provision: The provision mandates that the Commission must assess and report on the need to increment the sustainability due diligence requirements for financial institutions.
With Omnibus: The requirement is removed by Omnibus.
Omnibus Impacts on the Carbon Border Adjustment Mechanism (CBAM)
The Omnibus was initially set to amend the CSRD, the CSDDD, and the EU Taxonomy, but eventually, it ended up also tackling CBAM and its requirements. What changes with the proposal?
- Scope (“de minimis threshold”): If the original text mandates that the requirements do not apply for goods with an individual value per dispatch higher than €150 – the so-called “de minimis threshold” – such threshold is removed by Omnibus, but importers are still exempted if the net mass of the imported goods under CBAM does not exceed a cumulative annual threshold of 50 net tons. This amendment is one of the most impactful, as it reduces the scope by 90%.
- Calculation of embedded emissions (Art. 7): Right now, companies can use standard values instead of calculating emissions only under certain strict circumstances. The proposed adjustments simplify the calculation of embedded emissions, especially those based on standard values.
- Delegation to a CBAM representative (Art. 5): With Omnibus it would be possible to appoint a regular representative who acts in the name and on behalf of the importer to submit CBAM declarations. Please note that in this scenario the CBAM declarant remains legally responsible for fulfilling obligations even in case of delegation.
Omnibus Impacts on the EU Taxonomy Act
The EU Taxonomy Act applies to all companies subject to CSRD (Art. 19 b, Art. 29aa), but Omnibus updates the scope to companies with more than 1000 employees and up to €450 million turnover are no longer required to report on such principles. However, companies with more than 1000 employees and also more than € 450 million in turnover would still be mandated to report under the EU Taxonomy.
The other changes related to the EU Taxonomy Act are mainly two amendments:
- Materiality threshold: According to the original provisions, a materiality threshold is not expected. Omnibus exempts the economic activities from assessing Taxonomy eligibility/alignment in case they are not financially material (i.e. those not exceeding 10% of total turnover, capital expenditure, or total assets).
- Reduction in templates: Omnibus simplifies the burden of filling out the reporting templates by reducing the number of data points contained in current templates by almost 70%.
Why was Omnibus necessary?
These changes have been motivated by the EU Commission as a direct response to the discussions that recently took place across the EU about the need to increase competitiveness and productivity. In this context, the bureaucracy of administrative tasks is seen as a key enemy to EU competition.
In particular, it seems that the Commission has collected some feedback from a group of companies regarding the potential steps to decrease the administrative burden. The replies highlighted two aspects: on one side, companies seem not sure about the real value that the legislation is producing; on the other side, the burden.
The Omnibus is a very complex proposal aiming to streamline equally intricate sustainability procedures. However, some stakeholders wished that the suggested legislation would have planned a higher level of alignment. For instance, the concept of “value chain” is not defined in CSRD, while CSDDD has a very specific definition about what is the “chain of activities”; another example is that there is a reference to transition plans across all three pieces of legislation, but they are not aligned.
Conclusion
The EU Omnibus Package is shaping up to be one of the most impactful legislative developments in the EU’s sustainability journey. Proposed on February 26, 2025, and scheduled for a critical ballot on April 1, 2025, this proposal tries to harmonise robust sustainability frameworks through a double objective. First, the reduction of the administrative burden. And second, the increase in business competitiveness.
The suggested modifications, including higher thresholds, extended timelines, and simplified reporting prerequisites, will still exercise their impacts on thousands of European enterprises, although the proposed scope reduction is massive.
For larger corporations already investing in CSRD compliance, the uncertainty surrounding the Omnibus endorsement creates a challenging strategic environment. Meanwhile, mid-sized companies and SMEs may discover relief in the reduced scope and reporting commitments.
The outcome of the April 1 ballot will significantly influence the trajectory of corporate sustainability in Europe for forthcoming decades. Regardless of the result, enterprises would be well-advised to continue embedding sustainability principles into their core operations, not merely as a compliance exercise, but as a fundamental component of long-term business strategy in an increasingly sustainability-conscious global economy.
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