The EU Omnibus Regulation: What It Means for Your Business and How to Respond

On 26^th February 2025, the European Commission announced a new package of proposals aimed at streamlining sustainability reporting requirements. While still subject to legislative approval, businesses are already feeling the impact of uncertainty around potential changes to key regulations. The changes will impact certain requirements under the following:

• Corporate Sustainability Reporting Directive (CSRD): An EU directive requiring companies to disclose environmental, social, and governance (ESG) impacts to enhance corporate transparency and accountability.
• Corporate Sustainability Due Diligence Directive (CSDDD): An EU directive mandating companies to identify, prevent, and mitigate adverse human rights and environmental impacts in their operations and chains of activities.
• EU Taxonomy Regulation: A classification system defining environmentally sustainable economic activities to guide investment and corporate sustainability practices in the EU.
• Carbon Border Adjustment Mechanism (CBAM): An EU regulation that imposes a carbon price to imported goods entering the EU to prevent carbon leakage and promote global emissions reduction.

The package introduces the following key changes:

• 80% reduction in scope for the CSRD, limiting mandatory CSRD compliance to companies with more than 1,000 employees and either €50 million+ turnover or €25 million+ balance sheet
• A two-year postponement for those that remain in scope of CSRD but haven’t yet reported, giving more time for other companies to prepare and recalibrate
• No delay for EU listed companies already reporting to CSRD
• The removal of the possibility for expanded assurance (reasonable assurance)
• Removal of plans for sector-specific standards under CSRD
• A revision and simplification of the European Sustainability Reporting Standards, including a reduction in the number of data points required
• A one-year postponement of CSDDD for the first phase of application for the largest in-scope companies
• Relieving companies in scope of CSDDD from the obligation to systematically conduct in-depth assessments of adverse impacts in Tier 2+ supply chains (unless there is plausible information suggesting that adverse impacts have arisen or may arise there)
• Reducing the frequency of periodic assessments and monitoring required in the CSDDD from annual to every 5 years, with ad hoc assessments where necessary
• Removal of the requirement to implement climate transition plans (CTPs) previously included in the CSDDD (although maintaining the requirement to develop CTPs and include actions that have been implemented or planned) 
• Limit to the amount of data companies can request from smaller companies in their value chain
• Relaxation of rules for companies with more than 1,000 employees and a turnover below EUR 450 million by making the reporting of Taxonomy voluntary, and the option of reporting on partial Taxonomy-alignment
• Voluntary SME reporting standard (VSME) will be used as support for developing voluntary standards for the rest of the companies no longer in scope of the CSRD

This Package is a response to concerns about the complexity of requirements and remaining economically competitive globally. The pushback against sustainability regulation is not new; similar resistance was seen when financial disclosure requirements were introduced, yet today, transparent financial reporting is considered fundamental to market confidence. The proposed changes are now subject to a lengthy legislative process that could take 6-12 months or longer; it does not suspend the requirements of the existing regulations and current laws still apply.

Despite ongoing uncertainty, businesses should continue with sustainability reporting and compliance efforts.

EU listed large companies – maintain business as usual

If you reported against CSRD in FY2024, and the Non-Financial Reporting Directive (NFRD) before that, there are no compliance changes for you in terms of thresholds or timelines; there may be  fewer data points in due course.

Businesses due to report against the CSRD in FY2025 – do not press pause on your planned actions

If you are working towards your Double Materiality Assessment (DMA) or on closing your implementation gaps, go ahead as planned. If you delay and the regulations do not change as expected—or if the legislative process takes longer than anticipated—you could be at risk of non-compliance. There is wider value than just compliance to pressing forward with a robust materiality assessment, ESG strategy setting, putting in place effective performance improvement plans and preparing voluntary sustainability reports for stakeholders.

Small and medium-sized companies – take a stakeholder-focused approach

Even if reporting requirements shift, it remains beneficial to begin compliance efforts now. Implementing best practices, such as DMA, will enable you to meet investor expectations. It will also improve your corporate reputation and support your value chain relationships while helping you to benefit from better risk management and cost efficiencies ahead of potential regulatory changes.

Adapt, Don’t Pause

The fundamental principles of EU sustainability regulation represent best practices. Stay the course and make sure your company can ensure compliance while remaining adaptable to the potential changes, if approved. By taking proactive steps now, you can position your organisation for success in a shifting regulatory landscape and continue to invest in initiatives that build resilience and create business value.

Written by Anthesis.