EU’s Omnibus Proposal: The EU Commission to Propose Sweeping Changes to Sustainability Regulations – Companies with Less than 1000 Employees May Fall out of the CSRD Reporting Obligation Scope

The European Commission published the first Omnibus proposal on 26 February 2025 with the goal of harmonising and simplifying the reporting requirements of the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU taxonomy, and to eliminate overlapping regulations. The Omnibus proposal is motivated by concerns about the growing administrative burden on EU businesses and its impact on competitiveness.

The Omnibus proposal is part of the European Commission’s work program published on 11 February 2025 that aims at improving EU competitiveness, enhancing security, and strengthening economic resilience. The program includes five simplification packages, known as the “Omnibus” initiatives, which are intended to amend multiple regulations related to the same subject area at once. While the principles of alleviating administrative burden have been widely applauded, many companies that have already begun preparing for reporting have also been somewhat surprised.

Notably, the proposed changes to sustainability reporting obligations would have the most concrete and immediate impact on companies, many of whom are in the process of preparing their first sustainability report for the current financial year.

Key proposed changes to sustainability regulations

The main proposed changes to the CSRD are:

The EU Taxonomy would be made obligatory only to very large undertakings and the CSDDD would undergo some significant changes, such as removing of the requirement to “put into effect” climate transition plans.

The Omnibus proposal would significantly reduce (~80%) the number of companies in the scope of the CSRD. In practice, the limit of 1000 employees would be the most important criterion, as companies of this size would almost always exceed the financial limits.

Most importantly, the Omnibus proposal would delay the implementation of the CSRD for Wave 2 companies by two years so that they would publish their first sustainability reports only in 2028. However, in order for the delay to take place as planned, the Omnibus proposal should be completed and transposed into national law within the next 10 months. By comparison, it took the EU 25 months to adopt the CSRD.

For the time being, the reporting requirements will continue at the original thresholds but knowing that many things will change in ways that are not yet certain. Therefore, companies should carefully consider whether to suspend or defer their CSRD preparation in anticipation of the Omnibus changes. The Omnibus proposal is still only a proposal. Meanwhile, companies should continue to comply with the CSRD, as currently implemented in local law until the Omnibus is fully negotiated and transposed into national law.

Next steps and considerations

The proposal will now move to negotiations between EU legislators. The proposed deadline for national implementation is set at 31 December 2025. For substantive changes, the timetable includes a 12-month implementation period. Companies now reporting from 2024 will not be eligible for relief immediately, but it remains still unclear what will happen to the sustainability reporting for the year 2025.

Our experts will be following the legislative developments and will keep you informed. If you have any questions, please feel free to contact the undersigned or your regular Borenius contact.