On February 26, the European Commission published their highly anticipated proposals for the first Omnibus Simplification Package. This aims to streamline sustainable due diligence and financial reporting while staying the course with Green Deal objectives. The proposals outline amendments to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CS3D), the Carbon Border Adjustment Mechanism (CBAM), and EU Taxonomy.

The package is accompanied by a draft Taxonomy Delegated Act for public consultation. The European Commission notes that the motivation for the proposals is to “simplify EU rules, boost competitiveness and unlock additional investment capacity.” It emphasizes the total savings these changes could bring, including a “total savings in annual administrative costs of around €6.3 billion and to mobilise additional public and private investment capacity of €50 billion to support policy priorities.”

This blog explains the changes outlined in the proposals and what companies should do today to prepare.

Less Complexity, Lower Costs, Same Mission

Companies across the EU have voiced concern about the administrative and financial burdens caused by overlapping sustainability regulations. Many business leaders, especially in small and medium-sized enterprises (SMEs), think juggling multiple directives creates confusion and high compliance costs. 

In response, the European Commission is looking to reduce administrative costs by at least 25% for large companies and at least 35% for SMEs. Bringing these directives together into a single omnibus regulation could cut red tape and streamline compliance, and enable more cost-effective outcomes to support EU goals. 

The proposed areas of change include:

• Limiting the amount of information that may be requested from SMEs and small mid-caps as part of value-chain mapping by large companies
• Exploring ways to simplify and better align due diligence requirements
• Extending the deadline by a year (to July 26, 2028) for the largest companies to meet sustainability due diligence rules, while releasing the official guidelines a year earlier (in July 2026) so they have enough time to prepare

Below, we’ll dive deeper into the specific changes for each regulation. 

Corporate Sustainability Reporting Directive (2023)

• Reduction in scope: The reporting requirements would only apply to large undertakings that have more than 1,000 employees and either a turnover above €50 million or a balance sheet total above €25 million. This means the number of companies in scope will be reduced by about 80%. The new scope will be more closely aligned with the key scope thresholds of the CS3D.    
• Value chain cap: For companies no longer be in scope of the CSRD, the European Commission will adopt, by delegated act, a voluntary reporting standard, based on the standard for SMEs (VSME) developed by the European Financial Reporting Advisory Group (EFRAG). That standard will act as a shield by limiting the information that in-scope companies or banks can request from entities in their value chains with fewer than 1,000 employees.
• Changes to the European Sustainability Reporting Standards (ESRS): The European Commission will revise the delegated act establishing the ESRS, with the aim of substantially reducing the number of data points needed, clarifying vague provisions, and improving consistency with other pieces of legislation.  
• Deletion of sector-specific standards requirement: The proposal will remove the ability of the European Commission to adopt sector-specific standards.
• Removing the reasonable assurance standard: This means the European Commission can no longer upgrade the existing “limited assurance” requirement (a less rigorous form of auditing) to “reasonable assurance,” which is a more in-depth and costly verification standard. 
• Postponement of reporting requirements: Today’s package proposes postponing by two years the reporting requirements for large companies and listed SMEs (waves two and three) so co-legislators have time to agree to the European Commission’s proposed substantive changes. 

Corporate Sustainability Due Diligence Directive (2024)

• One-year postponement of the transposition deadline to July 26, 2027: The first phase of the application of the sustainability due diligence requirements was also delayed to to July 26, 2028, covering the largest companies. In the meantime, the Commission’s necessary guidelines will be advanced to July 2026, allowing companies to build on best practices and reduce their reliance on legal counseling and advisory services.
• Removing the obligation to systematically conduct in-depth assessments of adverse impacts that occur or may occur in often complex value chains at the level of indirect business partners. Full due diligence with respect to the value chain beyond direct business partners will be required only in cases where the company has information suggesting that adverse impacts have arisen or may arise there.
• Simplifying other aspects of sustainability due diligence requirements so large companies can avoid unnecessary complexity and costs. This includes extending the intervals between periodic assessments from one year to five years. It also clarifies that a company needs to assess its due diligence measures and update them whenever there is reason to believe the measures are no longer adequate or effective; streamlines stakeholder engagement obligations; and removes the obligation to end the business relationship as a last resort.
• Reducing the trickle-down effect by limiting the information that in-scope companies may request from their SME and small mid-cap business partners (i.e., companies with not more than 500 employees) to what is specified in the CSRD voluntary sustainability reporting standards (VSME standard). This limitation applies unless they need additional information to carry out the mapping (for instance, on impacts not covered by the standards) and they cannot obtain that information in any other reasonable way.
• Deferring to national civil liability rules: Under these changes, the EU will no longer have uniform rules for civil liability. Each member state can set its own standards and decide whether its laws override those of another country where the harm occurs. The proposal also removes the EU-wide requirement for member states to allow unions or NGOs to bring group lawsuits, leaving that decision to national law.

• Aligning the requirements on the adoption of transition plans for climate mitigation with the CSRD.

• Extending maximum harmonization to more provisions regarding core due diligence obligations to even out the playing field across the EU.
• Deleting the review clause on inclusion of financial services in the scope of the due diligence directive.

CBAM (2023)

• Exempt small importers (mostly SMEs and individuals) from CBAM obligations. These are entities that import small quantities of CBAM goods into the EU from third countries. This works by introducing a new CBAM cumulative annual threshold of 50 metric tons per importer, thus eliminating CBAM obligations for approximately 182,000 or 90% of importers, mostly SMEs, while still covering over 99% of emissions in scope.
• Simplify the rules related to the authorization of CBAM declarants and CBAM obligations, including the calculation of embedded emissions and reporting requirements.
• Make CBAM more effective in the long term by strengthening the rules to avoid circumvention and abuse.
• There is likely to be a future extension of CBAM to other ETS sectors and downstream goods, followed by a new legislative proposal on the scope extension of CBAM in early 2026.

EU Taxonomy (2020)

For companies that will eventually be in scope of the CSRD (large companies that have more than 1,000 employees) with a net turnover up to €450 million, the omnibus proposal envisions voluntary Taxonomy reporting. 

Companies that have made progress toward sustainability targets, but only meet certain EU Taxonomy requirements, may choose to voluntarily report on their partial Taxonomy alignment.

The European Commission is also publishing for consultation draft amendments to the Taxonomy Disclosures Delegated Act and the Taxonomy Climate and Environmental Delegated Acts, which:

• Simplify the reporting templates, leading to a reduction of data points by almost 70%
• Exempt companies from assessing Taxonomy eligibility and alignment of economic activities that are not financially material for their business (e.g., those not exceeding 10% of their total turnover, capital expenditure, or total assets)

Furthermore, the European Commission is proposing amendments to the key performance indicators used by financial institutions, particularly the green asset ratio (GAR) for banks. Based on the published text, banks will be able to exclude exposures that relate to undertakings that are not in the future scope of the CSRD (i.e., companies that are not large undertakings with 1,000 or more employees) from the denominator of the GAR.

The European Commission is also asking for feedback on two alternative options to simplify the most complex “do no significant harm” criteria for pollution prevention and control related to the use and presence of chemicals that apply across all economic sectors. In the public consultation, stakeholders are invited to provide feedback on both alternative options.

Next Steps

The legislative proposals will now be submitted to the European Parliament and the Council for their consideration and adoption. The changes to the CSRD, CS3D, and CBAM will enter into force once the co-legislators reach an agreement on the proposals and after publication in the EU Official Journal. The draft delegated act amending the current delegated acts under the EU Taxonomy Regulation will be adopted after public feedback and will apply at the end of the scrutiny period by the European Parliament and the Council.

Looking Ahead: What This Means for Companies

1. Maintain Existing Sustainability Efforts

Even with the omnibus on the horizon, companies should keep building strong compliance programs. The core requirements — reporting on sustainability topics, practicing due diligence, and meeting taxonomy guidelines — are not disappearing. They are simply being merged. It is vital for companies still in scope or in value chains to follow on the strategic components within their sustainability programs, including double materiality assessments and gap analysis.

a. Companies out of scope (>1,000 employees) are not out of the woods: The VSME voluntary standard will be a delegated act for companies not in scope to provide sustainability information to large companies subject to CSRD requirements. The VSME voluntary standard will act as a shield or a “value-chain cap” for those out-of-scope companies. Companies in scope of the CSRD will not be able to request from out-of-scope companies in their value chain (including SMEs and small mid-caps) information that goes beyond what is set out in the VSME voluntary standard. BUT companies will still need to meet the expectations listed in the VSMEs. 

2. Stay Ready for a New Regulatory Landscape

By continuing your sustainability processes, including in your value chain, you will proactively position your company to be prepared for whatever proposals are officially amended and put into force. 

3. Stay Engaged With Policymakers

Businesses have a window of opportunity to make their voices heard. By actively participating in consultations or industry coalitions, companies can help shape key details of the upcoming legislation, such as phased deadlines, sector-specific standards, and enforcement approaches.

4. Review the FAQ Published by the European Commission

Be mindful of how long the omnibus may take to be officially amended and transposed into national law. 

Your Next Steps

With the European Commission set to introduce the Omnibus Simplification Package, companies like yours face uncertainty and opportunity. For now, the best course of action is to press ahead with strong supply chain sustainability management. By doing so, you’ll be well-prepared for whatever shape the final omnibus regulation takes.

For more information about how Assent can elevate your program in 2025, book a demo with our team.