Omnibus Package Overview: Key Changes to CSRD, CSDDD, and EU Taxonomy
On February 26, 2025, the European Commission introduced the "Omnibus" package, which proposes significant amendments to the Corporate Sustainability Due Diligence Directive (CSDDD), Corporate Sustainability Reporting Directive (CSRD), and EU Taxonomy Regulation. These changes aim to simplify compliance, reduce administrative burdens, and improve alignment between EU sustainability laws.
Key Proposed Change
Corporate Sustainability Reporting Directive (CSRD)
- Reporting delay: The CSRD reporting deadlines for companies due to report in 2026 and 2027 (Wave 2 and 3) will be postponed by two years, providing businesses more time to meet reporting standards.
- Narrowed scope: The CSRD will apply only to large companies with over 1,000 employees, reducing the number of affected businesses by about 80%.
- Voluntary reporting for SMEs: A voluntary ESG reporting standard will be introduced for small and medium-sized enterprises (SMEs), minimizing data requests from larger companies.
Corporate Sustainability Due Diligence Directive (CSDDD)
- Focus on direct suppliers: Companies will only need to monitor their direct suppliers, making supply chain oversight more manageable.
- Less frequent reporting: Companies with over 500 employees will be required to assess supply chain impacts once every five years, instead of annually.
EU Taxonomy
- Voluntary alignment: Large companies within the future CSRD scope with a turnover up to €450 million can report voluntarily on their alignment with the EU Taxonomy.
- Simplified reporting: The European Commission proposes reducing Taxonomy reporting complexity by nearly 70%, exempting companies from reporting on immaterial activities (less than 10% of turnover, capital expenditure, or assets).
- Changes for financial institutions: Adjustments to the Green Asset Ratio (GAR) will exclude exposures related to companies no longer covered by the revised CSRD.
Proposed timeline
If adopted, the Omnibus Package would delay the reporting obligations for CSRD by two years (for Wave 2 and 3), and the CSDDD’s first phase would be transposed by 2028. These delays provide businesses more time to comply with EU directives and improve sustainability reporting.
Key Proposed Change
The Omnibus Proposal is now in the hands of the European Parliament and the European Council, where negotiations could introduce further changes. Until the legislative process is complete, existing regulations — including the CSRD, CSDDD, CBAM, and the EU Taxonomy — remain in force.For businesses, this means a continued focus on ESG compliance and supply chain risk management. Despite delays, companies should maintain momentum in:
- Sustainability reporting under the CSRD
- Supply chain due diligence in preparation for the CSDDD
- Carbon border tax compliance with CBAM
- Alignment with the EU Taxonomy for sustainability investments
Regulatory uncertainty does not mean inaction, let’s remember that a shift towards deregulation doesn’t eliminate the demand for corporate accountability. Companies that embed sustainability, due diligence and risk management into core business will be better positioned to navigate evolving risks.
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