The Omnibus directive is set to bring key changes for businesses across Europe.
At the Budapest Declaration on the New European Competitiveness Deal, EU Heads of State and Government urged the European Commission to simplify the ESG regulatory framework, aiming to reduce reporting requirements by at least 25% in the first half of 2025. In response, the Commission announced its intention to propose the “Simplification Omnibus package”.
On Wednesday, February 26, 2025, the European Commission published the first Simplification Omnibus package on sustainable finance reporting, sustainability due diligence and taxonomy.
This proposal aims to simplify regulations, easing the CSRD and CS3D burden on companies while preserving policy goals and ensuring cost-effective delivery of the European Green Deal.
What are the key takeaways from this Omnibus package?
In this article, we outline the Omnibus directive key changes that could impact your business regarding the CSRD, CS3D, and the Taxonomy.
How the Omnibus directive affects CSRD: An 80% reduction of the number of in scope companies
Scope reduction
The thresholds for application of the CSRD have changed: large European companies with more than 1000 employees and a turnover above € 50 million or a balance sheet above € 25 million are in scope (while previously companies with more than 250 employees and sales of €40 million were in scope).
Additionally, non-EU companies are in scope if they generate more than € 450 million in the EU (instead of €150 million).
Thus, the number of companies subject to mandatory sustainability reporting requirements is reduced by about 80%.
Voluntary reporting
For companies with no more than 1000 employees, the Commission proposes a voluntary use based on the VSME standard (Voluntary reporting standard for SMEs) developed by EFRAG.
In-scope companies cannot ask information to their smaller value chain suppliers (with no more than 1000 employees) that goes beyond the standards for voluntary use.
Reporting deadlines
For non-listed companies of more than 500 employees, listed companies with up to 500 employees and listed SMEs (former waves 2 and 3), the proposal would postpone by 2 years the entry into application of the reporting requirements, to give the European legislators time to reflect on possible changes.
The Commission invites them to reach rapid agreement.
The companies in scope (former wave 1) still need to publish their report in 2025, there is no postponement.
First set of ESRS
The proposal introduces a substantial reduction of the number of mandatory ESRS datapoints, prioritizing quantitative over narrative datapoints.
The Commission aims to adopt the necessary delegated act at the latest in the 6 months after the entry into force of the Omnibus changes to CSRD.
Also, the sector specific standards will be removed, to limit the number of datapoints to report.
The double materiality remains mandatory, there are no changes on this point.
Audit requirements
Regarding audit requirements, assurance will remain limited, and the Commission cannot adopt standards for reasonable assurance. The Commission will issue targeted assurance guidelines by 2026.
The value-chain cap
All companies with up to 1000 employees will be protected (rather than just SMEs), limiting the information they are asked to provide to in-scope companies to what is specified in the voluntary standard.
EU Taxonomy & Omnibus directive: An opt-in regime giving flexibility to mid-sized companies
The EU Taxonomy will remain mandatory only for companies with more than 1000 employees and a net turnover higher than €450 million.
Thus, the number of companies subject to the taxonomy is reduced by 85%. Additionally, the number of data requirements has been reduced by 70%.
Opt-in regime
Companies with activities that are aligned or partially aligned with the Taxonomy can voluntarily report in a more flexible way.
They shall disclose their turnover and CapEx KPIs and may choose to disclose their OpEx KPI.
Finally, a public consultation is planned to simplify the Do No Significant Harm (DNSH) criteria. Two options will be put to stakeholders in this consultation.
CS3D: Weakening of the due diligence requirements
The CS3D transposition deadline has been pushed back by one year, from 2026 to 2027, with its entry into application now set for 2028 instead of 2027. This extension aims to give companies more time to prepare for the implementation of the new framework.
Due diligence requirements
Companies subject to the CS3D will only need to monitor direct business partners.
They will no longer be required to systematically conduct in-depth analyses of their entire indirect value chain.
Instead, they will only need to perform full due diligence beyond their direct partners if they have indications of potential negative impacts.
Sustainability due diligence will be simplified, with supplier monitoring required every five years instead of annually.
Limitation of the trickle-down effect
In-scope companies can only request information from SME and small midcap partners (≤500 employees) as defined by the CSRD VSME standard.
This limitation applies unless additional information is needed to complete the mapping, such as impacts not covered by the standards, and cannot be obtained through any other reasonable means.
Transition plans for climate change mitigation
They remain mandatory to adopt but not to “put into effect”, aligning with the CSRD requirements.
Greater harmonization among Member States
The scope has been extended to include several additional provisions regulating key aspects of the due diligence process, leaving less flexibility for individual Member States.
Civil liability
The specific, EU-wide civil liability regime is removed from the directive.
The requirement for Member States to allow trade unions or NGOs to bring representative actions is being eliminated, leaving it up to national laws to determine how civil liability rules apply.
Contract termination
Until now, the regulations required companies whose suppliers did not meet the CS3D criteria to terminate their contracts with them (as a last resort). This is no longer required in case of actual or potential adverse impacts.
Penalties
The Commission will develop new fining guidelines in collaboration with the Member States.
The fine will no longer need to be proportionate to the company’s global net turnover.
Conclusion
This Omnibus directive key changes aim to ease the administrative burden on companies while preserving the overall ambition of the European Green Deal.
Its adjustments result in a narrower scope of application, reduced data granularity, and a potential weakening of the due diligence requirements.
The proposal will now be submitted to the European Parliament and the Council for consideration and adoption.
The deadline for the first reading response is three months.
Should there be disagreements between Parliament and the Council, additional readings will take place, without a set deadline for resolution.
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