The EU's omnibus initiative: more clarity and less bureaucracy?
With the omnibus initiative presented at the beginning of 2025, the European Union is pursuing controversial goals for its sustainability strategy. The package of measures is intended to update and simplify existing regulations and guidelines in sustainability reporting. The aim is to create clarity, reduce bureaucracy and encourage more investment. The new regulations will give companies in the EU legal certainty and additional time to prepare for their ESG reporting obligations - for example as part of the CSRD, CSDDD and EU taxonomy. You can find out exactly what the omnibus means, when the measures are due to come into force and what impact the changes could have on your company here.
Definition: Omnibus initiative, regulation or package?
Whether omnibus initiative, regulation, package or even package of measures: there is no one official term, as all variants are correct and commonly used. The EU Commission currently uses "omnibus package" to describe the collection of proposals to simplify existing EU regulations. In practice and in media reporting, "omnibus regulation" has become established and is mainly used in the context of specific legal acts that have already been officially adopted. However, "omnibus regulation" is the wrong term to use here, as the proposals still have to go through the legislative process at European level. Changes may still be made in the process.
Objectives and scope of the omnibus initiative
The background to the measures is what the EU considers to be the overly complex and strict regulatory requirements for sustainability reporting. In order to accelerate the reduction of bureaucracy and increase competitiveness, the measures of the Omnibus Initiative are intended to significantly simplify and harmonize three central EU regulations:
- Corporate Sustainability Reporting Directive(CSRD)
- Corporate Sustainability Due Diligence Directive(CSDDD)
- EU taxonomy
The reporting requirements for the three areas will be reduced by at least 25 percent, and by as much as 35 percent for small and medium-sized enterprises (SMEs). The intention behind this is that larger companies bear the burden of regulation, while capital market-oriented small and medium-sized enterprises are not overburdened with regulations and requirements. In concrete terms, this means that the data points and information that companies previously had to report as part of the CSRD, CSDDD and EU taxonomy will be significantly reduced. In future, the focus will be primarily on quantitative data points and less on a high level of detail. This would save companies resources in data collection and processing and reduce the administrative burden without compromising the basic information content of the reports.
However, the package of measures should also provide legal certainty. Companies can now better plan and implement their sustainability reporting. This will also increase investment in sustainable activities in order to drive forward the green transformation. Last but not least, the deadline extension is intended to create more of a buffer so that companies can anchor sustainability holistically and structurally in their corporate strategy. All of this is intended to turn sustainability into an economic opportunity rather than a regulatory burden - at least that is the hope.
Consequences for CSRD, CSDDD and EU taxonomy
Corporate Sustainability Reporting Directive (CSRD)
The CSRD requires companies to report on their risks as well as negative and positive impacts in the areas of the environment, society and corporate governance.The EU directive on sustainability reporting is being heavily revised and significantly adapted. In future, only companies with more than 1,000 employees and a balance sheet total of EUR 25 million or a turnover of EUR 50 million will be required to report. Capital market-oriented SMEs will thus be completely excluded from the scope of the reporting obligations. This would mean that around 80 percent of the companies originally affected would no longer be subject to the CSRD reporting obligation!
The stop-the-clock proposal of April 3, 2025 stipulates that the reporting obligation will be postponed. It will be postponed by two years for companies in the second wave (originally for financial years from January 1, 2025) and the third wave (originally for financial years from January 1, 2026). For large companies not previously covered by the Non-Financial Reporting Directive (NFRD), the reporting obligation will not begin until the 2027 financial year.
Corporate Sustainability Due Diligence Directive (CSDDD)
The CSDDD obliges companies to report annually on compliance with human rights and environmental due diligence obligations in their supply chains. The due diligence obligations are simplified for the European Supply Chain Directive. Companies now only have to include their direct business partners (Tier 1). The originally planned obligation to terminate business relationships with risky and problematic partners as a last resort has been dropped. This is intended to promote partnership-based optimization in the supply chains instead of directly pulling the ripcord to the business partner. In addition, the review cycle for business relationships has been extended from one to five years and the introduction of civil liability has been removed. However, companies should continue to enforce their Code of Conduct throughout the entire value chain. The first CSDDD obligations will take effect from July 26, 2028, one year later than originally planned.
EU taxonomy
Under the EU Taxonomy Regulation, companies are required to disclose how their business activities (including turnover, investments and operating expenses) affect the environment. Thanks to the Omnibus Initiative, companies with fewer than 1,000 employees and less than 450 million euros in turnover will be able to voluntarily submit a taxonomy report in future - just like CSRD reporting. Companies with more than 1,000 employees but less than 450 million euros in turnover must disclose the proportion of their investments relevant to the taxonomy (CapEx KPI, Capital Expenditures). The operating expenditures relevant to sustainability activities (OpEx-KPI, Operating Expenditures) can be reported voluntarily.
A materiality threshold will also be introduced: Activities below 10 percent of the relevant key financial figures are to become immaterial.Companies must therefore only assess and include economically significant activities in the report. The complex and strict "Do No Significant Harm" (DNSH) criteria will be relaxed in order to create more clarity and reduce the scope for interpretation. Overall, reporting is to become leaner, clearer and more practical.
The EU Commission is pushing for rapid implementation and wants to finalize the package in 2025 so that companies can work with the new requirements from 2026 or 2027. To this end, it will publish the proposal for the omnibus initiative on February 26, 2025 and submit it to the regular legislative procedure. It still requires the approval of the European Parliament and the EU Council. The delegated acts on the EU taxonomy are to be amended in the second quarter of 2025 and the revised ESRS (European Sustainability Reporting Standards, the basis of the CSRD) adopted no later than six months after the package comes into force.
Effects on companies
Companies benefit from noticeable simplifications thanks to the Omnibus Initiative:
- More legal and planning certainty: clarity at last for companies, which can now plan and implement their sustainability strategy more reliably.
- Less effort: Reduced reporting obligations and data points reduce the burden on small and medium-sized companies in particular.
- More time: The extended deadlines allow processes to be set up properly and existing structures to be optimized.
- Focus on the essentials: The elimination of mandatory standards (e.g. sector-specific ESRS) allows more entrepreneurial freedom in implementation.
- Strategic advantage: Those who continue to report voluntarily can use sustainability as a differentiating feature - and minimize regulatory risks at an early stage.
Criticism of the omnibus initiative: relief at the expense of impact
As understandable as the European Union's initiative to ease the burden on companies in sustainability reporting is, from the perspective of sustainability managers and the climate targets, the omnibus initiative represents a step backwards. Many of the ambitious requirements will be weakened or postponed. Sustainability in corporate practice is in danger of slipping down the agenda (again), being postponed or ignored. What has been painstakingly built up is in danger of becoming a minor matter. A disillusionment for many sustainability managers who work with conviction and strategic ambition.
But less regulation does not mean less responsibility. Now is the best time to take the lead voluntarily, to show a clear stance and vision and to do some internal persuasion work. Those who see sustainability not just as an obligation, but as a strategic lever, can use the time gained to consolidate structures, convince stakeholders and effectively anchor the topic within the company.
How to use the Omnibus initiative for your company
The newly gained freedom and flexibility should be seen as an opportunity to firmly anchor sustainability in the corporate strategy. Companies that are exempt from the reporting obligation in future should further intensify their efforts for sustainability and transparency. This is because key sustainability requirements will remain in place - such asCO2 accounting. Companies should therefore focus on sustainability reporting at an early stage and collect relevant data promptly. After all, proactive and strategic implementation offers considerable competitive advantages.
Important to note: The omnibus measures are likely to merge existing CSRD and CSDDD rules. This may lead to changes in the data formats for reporting. This makes it all the more important to keep a clear eye on the organizational structure, actively monitor regulatory developments and take a holistic view of opportunities and risks.
Conclusion: fewer rules, more clarity
The Omnibus Initiative marks a turning point: less obligation, more possibilities. It brings clarity and significant bureaucratic relief without watering down the basic principles of sustainable corporate governance. Companies - including those that will no longer be required to report on CSRD, CSDDD and the EU taxonomy - are well advised to use the changes strategically in order to establish sustainability as a genuine competitive advantage.
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