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Our guide to the EU Omnibus Regulation
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Sustainability regulations in the European Union are complex, overlapping, and, according to many businesses, increasingly difficult to navigate. In response, the European Commission is expected to unveil an Omnibus Regulation - a proposal aimed at simplifying key corporate sustainability reporting requirements while maintaining the EU’s ambitious environmental and social governance (ESG) goals.
The proposal, which is expected to be released on February 26, 2025, has been framed as part of the EU’s broader Competitiveness Compass - a strategy designed to enhance Europe’s economic resilience by reducing regulatory burdens. At its core, the Omnibus proposal is anticipated to streamline reporting obligations under the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy.
But while the Commission argues that this will reduce compliance costs for businesses, the proposal has already sparked significant debate. Investors and sustainability advocates fear that cutting back on reporting requirements could weaken corporate transparency, while some businesses warn that changes could create further legal uncertainty just as they’ve started implementing existing regulations.
In this guide, we break down what we know so far about the EU Omnibus Regulation, its expected impact, and the key points businesses should be aware of as they prepare for potential regulatory changes.
What is the EU Omnibus Regulation?
“ At this stage, the EU Omnibus Regulation has not yet been finalised, but based on public statements and leaked drafts, it is expected to be a major legislative initiative aimed at simplifying sustainability reporting. The proposal is being introduced as part of the EU’s Competitiveness Compass, a broader strategy to reduce regulatory burdens and enhance economic resilience. ”
Why is the EU proposing an Omnibus Regulation?
The Omnibus Regulation is anticipated to consolidate and harmonize requirements under three key EU sustainability laws:
- Corporate Sustainability Reporting Directive (CSRD): Expands sustainability reporting requirements for large companies and listed SMEs, ensuring more transparency on ESG impacts.
- Corporate Sustainability Due Diligence Directive (CSDDD): Requires companies to identify and address environmental and human rights risks in their value chains.
- EU Taxonomy: Establishes common definitions of environmentally sustainable activities, guiding investment and corporate decision-making.
Currently, businesses often struggle with overlapping obligations and inconsistent reporting requirements across these regulations. According to the Draghi Report on European Competitiveness, regulatory fragmentation has made it harder for companies to scale, invest, and remain competitive, particularly in comparison to the US and China.
By bringing these frameworks under a single umbrella, the Omnibus proposal aims to reduce duplication, ease compliance costs, and simplify sustainability disclosures, particularly for small and medium-sized enterprises (SMEs). The Commission has publicly stated that the target is to reduce reporting burdens by 25% for large companies and 35% for SMEs.
How does this fit into the EU’s Competitiveness Strategy?
The Omnibus proposal aligns with the EU Competitiveness Compass, a roadmap released in January 2025 that outlines priorities for making Europe more economically competitive. The Commission has positioned this regulation as a necessary step to balance sustainability objectives with economic growth.
However, critics argue that reducing reporting obligations could weaken corporate accountability and create legal uncertainty for businesses that have already invested in compliance.
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Why is the Omnibus Regulation being proposed?
The primary motivation behind the EU Omnibus Regulation is to reduce regulatory complexity while maintaining sustainability commitments. The European Commission argues that businesses - particularly small and medium-sized enterprises (SMEs) - are struggling with overlapping and burdensome reporting requirements under multiple sustainability laws.
Addressing regulatory overlap and complexity
Currently, companies subject to the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy face multiple layers of reporting obligations, compliance deadlines, and disclosure requirements. The Omnibus proposal is expected to streamline these frameworks, making it easier for companies to meet their obligations without unnecessary duplication.
According to the Draghi Report on European Competitiveness, the EU’s current approach to sustainability regulation has created barriers to investment and growth. The report notes that complex and inconsistent rules hinder businesses from scaling up within Europe, leading some companies to seek investment in the US or other markets with more predictable regulatory frameworks.
The political push for simplification
The proposal is also heavily influenced by political pressure from key EU economies, particularly Germany and France. In January 2025, German Finance Minister Joerg Kukies called for a two-year delay in certain CSRD reporting requirements and removal of sector-specific reporting obligations. Shortly afterward, France called for a “massive regulatory pause”, arguing that some sustainability regulations need to be revised to reflect changing economic realities.
“ The Competitiveness Compass, released in January 2025, set specific targets to cut the reporting burden by at least 25% for large companies and 35% for SMEs. The Omnibus proposal is expected to play a key role in meeting these targets by adjusting compliance requirements, redefining company size thresholds, and possibly delaying certain reporting deadlines. ”
Balancing competitiveness and sustainability
The European Commission insists that the Omnibus proposal is not about deregulation, but about making sustainability rules more effective. However, the business and investment community is divided:
- Supporters argue that the current regulatory landscape is too complex and that reducing unnecessary compliance burdens will help mobilize private investment in the green transition. A 2023 PwC study found that 64% of organizations struggle with the technical complexity of CSRD implementation, highlighting the need for simplification.
- Critics, including the Institutional Investors Group on Climate Change (IIGCC), the European Sustainable Investment Forum (Eurosif), and the Principles for Responsible Investment (PRI), along with 162 investors managing approximately €6.6 trillion in assets and 49 service providers and supporting organizations - a total of 211 signatories - warn that reopening sustainability regulations could create legal uncertainty and weaken corporate transparency. In a joint statement, they have called on the European Commission to preserve the integrity and ambition of the EU’s sustainable finance framework.
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What changes might the Omnibus Regulation introduce?
“ While the final details of the EU Omnibus Regulation remain uncertain, the proposal is expected to introduce targeted adjustments to sustainability reporting requirements. The European Commission has signaled its intent to streamline compliance while ensuring that core ESG principles remain intact. Proposed changes could include adjustments to reporting timelines, revisions to compliance obligations, and a focus on the most material disclosures to reduce administrative burdens - particularly for SMEs and mid-sized firms. ”
| Proposed Change | Description |
|---|---|
| Reduction in Reporting Burden | EU may eliminate up to 275 data points from CSRD reporting; focus on material ESG risks; reduce compliance burdens for SMEs. |
| Adjustments to Compliance Timelines | Germany and France pushing for a 1- to 2-year delay in CSRD and CSDDD deadlines, but delays may apply mainly to SMEs. |
| Introduction of a ‘Small Mid-Cap’ Category | New category for companies with 250–1,500 employees and sales below €1.5B, allowing for lighter reporting obligations. |
| Changes to Supply Chain Reporting Requirements | Possible exemptions for smaller suppliers from certain due diligence requirements; focus shifting to highest-risk activities. |
| Potential Revisions to CSRD and CSDDD Scope | Proposals to raise the large company threshold from 250 employees to 1,000 or even 5,000; strong opposition from investors. |
1. Reduction in reporting burden
One of the main objectives of the Omnibus proposal is to streamline sustainability reporting requirements under the CSRD, CSDDD, and EU Taxonomy. Some potential changes include:
- Removing redundant data points: early reports suggest the EU may eliminate up to 275 data points from CSRD reporting requirements.
- Aligning sustainability reporting with investor needs, ensuring that companies focus on material ESG risks rather than extensive disclosures that may not be relevant to all businesses.
- Reducing compliance burdens on SMEs, particularly those that are indirectly affected by reporting obligations through supply chain requirements.
2. Adjustments to compliance timelines
Germany and France have pushed for a delay in CSRD and CSDDD reporting deadlines, citing concerns that companies need more time to adapt. One possible outcome of the Omnibus proposal is a one- to two-year postponement for some reporting obligations.
However, it’s been suggested that any delays would not impact larger companies that are already subject to existing sustainability disclosure requirements. Instead, the focus may be on SMEs and mid-sized companies that are set to come under CSRD in later phases.
3. Introduction of a ‘Small Mid-Cap’ category
A key structural change under consideration is the creation of a new company classification:
- Small mid-cap companies (between 250 and 1,500 employees, with sales below €1.5 billion) may face lighter reporting obligations than large companies.
- This new category could exempt thousands of companies from the most stringent CSRD and CSDDD requirements, reducing their administrative burden while maintaining basic disclosure obligations.
4. Changes to supply chain reporting requirements
Under the current CSDDD framework, companies are required to assess and mitigate human rights and environmental risks across their value chains. Early reports suggest the Omnibus proposal may:
- Exempt smaller suppliers from certain due diligence and disclosure requirements, reducing the regulatory burden on SMEs.
- Shift the focus to the most harmful activities, ensuring companies prioritize the biggest sustainability risks rather than conducting extensive due diligence across all supply chain partners.
5. Potential revisions to CSRD and CSDDD scope
While the European Commission has denied that the Omnibus proposal will weaken sustainability rules, some politicians and businesses have called for higher reporting thresholds to reduce the number of companies covered by CSRD and CSDDD.
We’ve already mentioned that Germany proposed raising the large company threshold from 250 employees to 1,000, while France has suggested setting the minimum at 5,000 employees and €1.5 billion in revenue. If implemented, this would exempt thousands of companies from sustainability reporting requirements.
What are the main concerns with the Omnibus Regulation?
While the Omnibus Regulation is still in the proposal stage, it has already sparked significant debate among businesses, investors, policymakers, and sustainability advocates. While some argue that simplifying reporting obligations is necessary to improve European competitiveness, others warn that weakening sustainability regulations could create legal uncertainty and undermine corporate transparency.
Here are the main areas of contention:
Pushback from businesses and investors seeking stability
One of the biggest concerns comes from businesses that have already invested heavily in preparing for the CSRD, CSDDD, and EU Taxonomy. Some of the EU’s largest companies, including Unilever, Mars, Nestlé, and DP World have urged the Commission not to weaken sustainability reporting standards.
Their main argument? Regulatory stability is essential. Many companies have already restructured compliance teams, trained employees, and built sustainability reporting frameworks based on existing rules. Sudden changes to disclosure requirements could force businesses to rework their strategies, leading to higher costs rather than savings.
Investors have raised similar concerns, warning that watering down sustainability disclosures could reduce the availability of reliable ESG data, making it harder to assess corporate risks and opportunities.
Fears that the Omnibus Proposal could dilute ESG standards
Sustainability advocates and some policymakers fear that reducing reporting requirements could weaken corporate accountability. While the Commission insists that the core principles of CSRD, CSDDD, and the EU Taxonomy will remain intact, critics argue that:
- Exempting certain businesses from reporting (for example, through higher reporting thresholds) could weaken supply chain transparency.
- Reducing disclosure obligations for SMEs and mid-sized firms could limit investor insights into ESG risks.
- Postponing compliance deadlines could delay progress on corporate sustainability goals.
Some political groups within the European Parliament - such as Renew Europe - have publicly opposed the idea of delaying or rolling back sustainability regulations, calling it a deregulation agenda rather than simplification.
Legal uncertainty and compliance risks for companies
Many businesses that support the Omnibus proposal in principle worry about legal uncertainty. If the EU reopens major sustainability laws for revision, the legislative process could take months or even years, leaving companies in a state of uncertainty.
Additionally, since some Member States have already transposed CSRD and CSDDD into national law, it is unclear how the Omnibus proposal will interact with existing national regulations. This raises questions such as:
- Will companies that have already started compliance efforts need to revise their strategies?
- How will the EU align national-level reporting requirements with a revised framework?
- Could some companies be subject to stricter rules in certain countries despite Omnibus-driven simplifications?
Simplification or deregulation?
At the heart of the debate is a fundamental question: Does the Omnibus proposal represent necessary simplifications, or is it an attempt to roll back key sustainability commitments?
The Commission has repeatedly stated that the goal is not to weaken ESG regulations but to make them more effective and manageable for businesses. However, opponents argue that reducing data points, raising reporting thresholds, and delaying compliance deadlines could undermine the EU’s Green Deal ambitions.
What this could mean for businesses
Businesses must prepare for potential changes while remaining compliant with existing sustainability regulations. While the European Commission has positioned the Omnibus proposal as a way to reduce reporting burdens and improve efficiency, the final outcome remains uncertain.
Regardless of how the legislative process unfolds, companies should consider the following key implications:
Companies should continue preparing for CSRD, CSDDD, and the EU Taxonomy
Even if the Omnibus proposal introduces delays or simplifications, the fundamental principles of sustainability reporting are unlikely to change. Businesses that pause or slow their compliance efforts risk falling behind when the new framework is finalized.
- CSRD reporting for large companies remains in effect. The current deadlines apply, and companies that have already started compliance should continue their efforts.
- Businesses within supply chains will still face sustainability expectations. Many large corporations require ESG disclosures from their suppliers, regardless of regulatory shifts.
- Regulatory uncertainty does not eliminate risk. If the Omnibus proposal faces delays in the legislative process, companies that have postponed compliance could find themselves unprepared when reporting obligations remain unchanged.
Impact on supply chain reporting and access to capital
If the Omnibus proposal reduces disclosure requirements for SMEs and mid-sized firms, this could have both positive and negative implications for businesses operating in supply chains.
- For SMEs: A potential reduction in reporting burdens could ease administrative strain, but large corporations may still require sustainability data from suppliers to meet their own reporting obligations.
- For investors: Financial institutions managing trillions in assets have emphasized that sustainability reporting is essential for decision-making. If transparency is reduced, businesses could face challenges securing funding from ESG-focused investors.
- For multinationals: Companies with global sustainability commitments may still need to maintain high ESG reporting standards, regardless of EU regulatory changes.
Risks of delaying compliance efforts
Businesses that assume the Omnibus proposal will significantly weaken sustainability rules may face unexpected challenges if the final regulation maintains key reporting requirements.
- Regulatory uncertainty creates compliance risks: If the legislative process extends into 2026, companies that have postponed sustainability reporting may struggle to catch up.
- Global alignment continues to push for strong ESG disclosures: Even if the EU simplifies reporting, international frameworks such as the ISSB and SEC sustainability rules will still influence market expectations.
- Companies that are well-prepared will gain a competitive advantage: Proactively aligning with sustainability reporting requirements can enhance brand reputation, improve investor confidence, and position businesses as leaders in ESG compliance.
How businesses can stay prepared
While the Omnibus proposal is expected to introduce regulatory simplifications, businesses should not assume major changes until the final legislation is confirmed. Given the uncertainty surrounding the proposal, companies should take a proactive approach to compliance to avoid being caught off guard. Here are some practical steps businesses can take to stay ahead:
- Keep an eye on updates: Since the Omnibus Regulation is still a work in progress, businesses must stay informed on its progress through the EU legislative process. Regulatory changes can shift quickly, and companies that fail to keep up may find themselves unprepared for unexpected developments. Follow official EU sources such as the European Commission, the European Parliament, and regulatory bodies like EFRAG (European Financial Reporting Advisory Group).
- Continue building sustainability data management systems: Even if some reporting obligations are reduced, businesses will still need to track and disclose sustainability performance for investors, stakeholders, and compliance with other frameworks. A well-organized sustainability data system will future-proof a company against regulatory uncertainty.
- Maintain internal sustainability goals and governance: Even if some reporting obligations are reduced, sustainability remains a core focus for investors, consumers, and regulators. Companies should not see the Omnibus proposal as a reason to scale back sustainability commitments.
- Be ready for different outcomes: Since the final regulation is still uncertain, businesses should develop flexible compliance strategies based on the three potential Omnibus scenarios:
| Scenario | Recommended Business Action |
|---|---|
| Significant Reduction in Reporting Obligations (Scenario 1) | Focus on voluntary ESG disclosures to maintain investor trust and competitive advantage. |
| Moderate Changes (Scenario 2 - Most Likely) | Ensure your company is ready to comply with adjusted CSRD, CSDDD, and EU Taxonomy requirements while leveraging any simplifications. |
| Minimal Changes (Scenario 3) | Continue preparing as planned, ensuring full compliance with CSRD and other EU sustainability regulations. |
How Greenly can help your company
Greenly helps businesses navigate sustainability regulations like CSRD, ensuring compliance while building a stronger sustainability strategy. Regardless of how the Omnibus Regulation unfolds, companies will still need to track emissions, manage supply chain risks, and align with investor expectations - and Greenly provides the tools to do just that.
How Greenly can help
- Carbon Management & Reporting: Easily measure, track, and reduce Scope 1,2, and 3 emissions, ensuring compliance with evolving sustainability regulations.
- Supply Chain & Due Diligence Support: Companies still need visibility into supplier emissions and risks - Greenly helps streamline data collection and reporting.
- Global Regulatory Alignment: Beyond EU rules, investors and stakeholders expect transparency. Greenly’s platform aligns with ISSB and other international frameworks.
- Actionable Sustainability Insights: Whether reporting requirements shift or remain unchanged, Greenly helps businesses proactively reduce emissions, improve efficiency, and strengthen ESG performance.
Sustainability isn’t just about compliance - it’s a competitive advantage. Get in touch with Greenly today to find out more.
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