The Omnibus Package: What Companies and ESG Managers Need to Know

In response to growing concerns about the complexity of sustainability regulations and their potential to hinder European businesses, the European Commission has introduced the Omnibus Simplification Package.

This proposal aims to streamline corporate sustainability reporting while maintaining the EU’s ambitious environmental and social goals. The Omnibus package is a critical turning point in the EU’s regulatory landscape, potentially reshaping how companies engage with sustainability and ESG reporting. Here’s everything companies and sustainability ESG managers need to know.

What is the Omnibus Package?

The Omnibus Package, proposed on February 26, 2025, introduces a series of amendments to key EU regulations, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Carbon Border Adjustment Mechanism (CBAM). The overall goal is to reduce administrative burdens, simplify compliance processes, and make the regulatory environment more favorable to businesses, particularly small and medium-sized enterprises (SMEs). The European Commission has explicitly stated its goal to cut reporting burdens by 25% for large companies and 35% for SMEs.

While the proposal is still under discussion and has not yet passed through the European Parliament and Council, its potential implications for corporate sustainability and ESG practices are already sparking significant debate.

Key Changes in the Omnibus Package

1. Reduction in Scope for CSRD Reporting

The proposed changes aim to reduce the scope of the Corporate Sustainability Reporting Directive (CSRD) by 80%. They also plan to redefine “large companies” by raising the threshold to 1,000 employees, replacing the current criteria of 250 employees, EUR 50 million in turnover, or a EUR 25 million balance sheet total. This means that many companies previously required to report under CSRD may no longer fall under its obligations, dramatically decreasing the number of firms subject to mandatory sustainability reporting.

For many businesses, especially mid-sized companies, this change raises critical questions: Should they continue investing in compliance efforts, or will they be relieved of these burdens in the near future? However, companies that still meet the revised criteria must proceed with their sustainability strategies and reporting as usual.

2. “Stop the Clock” for CSRD Reporting Deadlines

The Omnibus proposal also includes a significant delay for CSRD reporting deadlines. Companies in the second and third waves of CSRD implementation will receive a two-year postponement, meaning that their first reports will not be due until 2028, instead of 2026 or 2027. This delay gives businesses more time to adapt to the evolving regulatory framework and avoid rushing to comply with potentially outdated requirements.

However, there is no delay for companies in the first wave of CSRD reporting, who are already required to start reporting in 2025. These companies will continue as planned unless the final package alters the timeline further.

3. Proposed Changes to CSDDD and EU Taxonomy

The Corporate Sustainability Due Diligence Directive (CSDDD) will be modified, but not drastically. Its implementation timeline will be extended by one year. This gives companies more time to meet due diligence requirements.

The reporting scope will also be simplified. Companies will focus on direct supply chain relationships. They won’t need to assess all indirect suppliers in detail.

For the EU Taxonomy, the Omnibus Package proposes a shift to an opt-in system for large companies. Businesses can choose to report on their alignment with the Taxonomy. Requirements will be lighter. Partial alignment disclosures will be allowed instead of full technical screening.

4. Voluntary Reporting: A Growing Trend?

One of the most notable shifts is the potential for voluntary ESG reporting. Many companies may soon fall out of scope for mandatory CSRD reporting. In response, the European Commission has hinted at a new voluntary reporting standard. However, experts warn it may lack the depth and consistency of the current ESRS used for mandatory reporting. This raises concerns about the comparability and reliability of voluntary reports, particularly for investors seeking transparent and consistent ESG data.

5. Simplified Reporting Standards

To further reduce the compliance burden, the Omnibus proposal envisions simplifying the existing ESRS (European Sustainability Reporting Standards). The number of mandatory data points would be significantly reduced, and sector-specific standards could be eliminated. While this would lighten the reporting load, it also means companies will need to focus their efforts on the most strategically important sustainability issues, ensuring that their reports remain relevant and aligned with business objectives.

Why This Matters for Companies and ESG Managers

For companies, particularly those in the second and third waves of CSRD implementation, the Omnibus Package could significantly alter compliance strategies. While many businesses will benefit from the reduction in reporting requirements, they also face the risk of regulatory uncertainty. The “stop-the-clock” proposal leaves many businesses in limbo, unsure of whether their current compliance investments will pay off or if they will be subject to new, revised regulations in the future.

For ESG managers, the shifting regulatory landscape presents both challenges and opportunities. As companies navigate the potential changes, ESG managers should:

• Stay Informed: Given the evolving nature of the Omnibus Package, ESG managers must stay up to date with legislative developments. Whether or not the package is approved, companies must continue to treat sustainability reporting as a critical compliance area.
• Evaluate Reporting Strategies: ESG managers should assess their current sustainability reporting practices and consider whether they align with the proposed changes. Preparing for simplified reporting or shifting to a voluntary standard may require adjustments in strategy.
• Proactively Address Stakeholder Expectations: Regardless of regulatory shifts, investors, customers, and other stakeholders will continue to demand transparency. Companies that stay ahead of sustainability trends, even if not legally required, can differentiate themselves in the market.
• Focus on Long-Term Value: Sustainability reporting is not just about meeting regulatory requirements; it’s a strategic tool for managing risks and creating value. ESG managers should emphasize the broader business benefits of reporting, such as improved operational efficiency, better risk management, and stronger investor relations.

The Bigger Picture: What Does This Mean for the Future?

The Omnibus proposal marks a pivotal moment in the EU’s sustainability journey. It reflects the EU’s desire to balance environmental goals with the need for a competitive business environment. However, the ongoing debates about simplification versus deregulation raise key questions about the long-term impact on transparency and business resilience.

Sustainability reporting will remain a key part of corporate strategy, risk management, and long-term value creation. Whether or not the Omnibus Package is approved, this focus will not change.

Companies that align with best practices now can lead the way in sustainability. They will be better prepared to navigate evolving regulations and succeed in a more sustainability-conscious market.

As businesses and ESG managers plan ahead, they must be ready for both opportunities and challenges. Taking action today lays the groundwork for long-term success.

Attending the upcoming Europe | Certified Sustainability (ESG) Practitioner Program, Advanced Edition 2025, on May 22-23 & 26 is essential. This program offers crucial insights into the new regulatory landscape, including the Omnibus Package. It provides the tools and strategies needed to stay compliant and meet stakeholder expectations.