The Omnibus package was proposed by the European Commission with the aim of simplifying ESG rules and making EU businesses more competitive. The package, if adopted, will reduce administrative burdens for all companies by 25% and for SMEs by 35%.
What will the legislation do?
Omnibus impacts the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), EU Taxonomy and Carbon Border Adjustment Mechanism Regulation (CBAM).
Regarding the CSRD, if Omnibus is adopted, it will be simplifying reporting and postponing the implementation of the Directive. Also, the scope of the directive will be reduced by 80%, as only companies with over 1,000 employees will be required to issue an ESG report. Smaller companies can choose to report under voluntary standards.
What has been adopted so far and which are the next steps?
The European Commission submitted the proposals to the European Council and Parliament on 25 February for their consideration and adoption.
Until now, the following have been approved:
- The CSRD has been postponed by two years for large companies and listed SMES, that fall under the second and third wave
- The CSDDD has been postponed by one year
For the rest of the proposed amendments, there will be separate consultations at the European Parliament and Council. The two legislative bodies of the EU have the right to conduct up to three readings of the legislation until it adopts or rejects it.
Below is a comparison between the existing legislation and the proposed amendment:
| Area | Existing legislation | Proposed amendment |
| Scope |
Wave 1: Public Interest Entities with 500+ employees
Wave 2: Large companies that meet two of the three criteria: · 250 employees · € 50 million net turnover · € 25 million balance sheet total Wave 3: SMEs listed in an EU regulated market Wave 4: Non- EU groups with a net turnover of more than €150 million in the EU and a qualifying EU branch or subsidiary |
Wave 1: Unaffected for the first year and then applicable only for companies with over 1,000 employees
Wave 2: Only applicable to companies with over 1,000 employees and: · € 50 million net turnover
Wave 3: Out of scope or postponed Wave 4: Thresholds raised to: · € 450 million turnover generated in the EU, and · large EU subsidiary; or · EU branch with over €50 million turnover |
| Timing | Wave 1: 2025 for FY 24
Wave 2: 2026 for FY 25 Wave 3: 2027 for FY 26 Wave 4: 2029 for FY 28 |
Wave 1: 2025 for FY 24 (unaffected)
Wave 2: 2028 for FY 27 Wave 3: Out of scope Wave 4: 2029 for FY 28 (unaffected) |
| Legal requirements | Mandatory for all companies in scope | Mandatory for companies with over 1,000 employees
Voluntary standards for companies with fewer than 1,000 employees |
| European Sustainability Reporting Standards (ESRS) | 1,500+ datapoints to be released, depending on the type of company and material topics
Sector-specific standards to be released in 2026 |
ESRS to be simplified – at least 25% fewer datapoints
Deletion of sector-specific standards |
| Assurance | Limited assurance for first years of application
Reasonable assurance standards to be adopted in 2028 |
Limited assurance only |
| Reporting format | Digital tagging | Until a delegated regulation is adopted, it is not required |
Should companies stop their ESG efforts?
ESG does not start nor stop at compliance with the CSRD. Solid ESG practices bring many positive returns to companies with tangible effects on their bottom line. Companies with solid ESG practices have access to sustainability-linked loans with better interest rates, are better positioned to attract and retain talent, and have a more loyal customer base. In addition, current and prospective investors of a company are looking into ESG reports to inform their risk management practices, provide them insights into management stewardship of ESG risks and opportunities, and evaluate the long-term value of an organization.
