Understanding the EU's Omnibus Proposal: Simplifying Sustainability Regulations

EU Omnibus Proposal: Simplifying sustainability regulations for a greener future.

In February 2025, the European Commission introduced the "Omnibus Simplification Package," commonly referred to as the Omnibus Proposal. This initiative seeks to reduce bureaucratic hurdles for businesses, particularly small and medium-sized enterprises (SMEs), by easing certain sustainability reporting and due diligence requirements. The goal is to enhance the EU's global competitiveness while maintaining its commitment to environmental and human rights standards.

Key Changes Proposed:

1. Corporate Sustainability Reporting Directive (CSRD):

   • Scope Reduction: The CSRD would now apply only to large companies with over 1,000 employees and either more than €50 million in turnover or €25 million in assets. This change aims to reduce the number of companies required to report by approximately 80%, thereby lightening the regulatory load on smaller businesses.

     
     

2. Corporate Sustainability Due Diligence Directive (CSDDD):

   • Reporting Delays: The proposal suggests postponing initial reporting obligations from 2027 to 2028.

   • Supply Chain Focus: Due diligence requirements would be limited to direct suppliers, reducing the scope of assessments.

   • Assessment Frequency: The frequency of environmental and human rights assessments could shift from annual to every five years.

     
     

3. Carbon Border Adjustment Mechanism (CBAM):

   • Reporting Threshold: The CBAM would apply to companies importing goods weighing over 50 metric tons annually, effectively exempting about 90% of importers.

   • Simplified Procedures: The process for claiming carbon price reductions would be streamlined by publishing average carbon prices from exporting countries starting in 2027.

     
     

Reactions and Concerns:

While the Omnibus Proposal aims to reduce regulatory burdens, it has faced criticism from various quarters:

• Civil Society Organizations: Over 360 NGOs, including ClientEarth, argue that the proposal weakens corporate accountability laws, potentially undermining protections against human rights abuses and environmental degradation.

• Human Rights Advocates: The International Federation for Human Rights (FIDH) expresses concern that the changes could dilute the effectiveness of the CSDDD, making it harder to hold companies accountable for their environmental and human rights impacts.

• Business and Sustainability Experts: Some warn that while reducing bureaucracy is beneficial, overly simplifying regulations might hinder meaningful progress in sustainability reporting and due diligence, potentially affecting investor confidence and Europe's green competitiveness.

  
  

Looking Ahead:

The Omnibus Proposal is currently under review by the European Parliament and EU member states. If approved, these changes could significantly reshape the EU's sustainability landscape, balancing the need for business competitiveness with the commitment to environmental and human rights standards. As discussions continue, stakeholders across the spectrum are closely monitoring developments to understand their potential impact.