The EU Omnibus Proposal: What It Means for Your Sustainability Reporting

The European Union’s latest legislative package—the EU Omnibus Proposal—marks another significant shift in corporate sustainability reporting. Designed to streamline and strengthen compliance requirements under the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy, this proposal aims to reduce complexity, improve clarity, and ensure that businesses can effectively implement sustainability measures.

But what does this mean in practical terms? Let’s break down the key takeaways and how businesses should prepare.

What Is the EU Omnibus Proposal?

The Omnibus Proposal, released in early 2025, is a legislative update designed to adjust and refine key elements of the EU’s sustainability reporting landscape, particularly focusing on:

• CSRD Implementation: Clarifying reporting timelines, scope, and obligations for companies.
• CSDDD Alignment: Ensuring consistency in corporate due diligence requirements for sustainability impacts.
• EU Taxonomy Adjustments: Aligning classification criteria to improve usability.
• General Streamlining: Reducing administrative burdens while maintaining robust sustainability disclosure requirements.

In essence, the proposal seeks to make sustainability reporting more coherent and manageable for businesses across Europe while ensuring that disclosures are consistent, comparable, and actionable for investors and regulators.

Key Changes Businesses Need to Know

1. CSRD Adjustments: Narrowing Scope and Delaying Implementation

The CSRD, which expands mandatory sustainability disclosures across the EU, has faced implementation challenges. The Omnibus Proposal seeks to:

• Postpone reporting deadlines for companies due to report in 2026 and 2027 (“Wave 2 and 3” companies) by two years, allowing more time for compliance.
• Reduce the scope of affected companies, limiting mandatory reporting to large undertakings with over 1,000 employees and either €50 million in turnover or €25 million in total assets, excluding nearly 80% of initially covered firms.
• Introduce voluntary ESG reporting for VSMEs (Very Small and Medium Enterprises with fewer than 1,000 employees), reducing data request burdens from larger firms.
• Revise European Sustainability Reporting Standards (ESRS) by eliminating sector-specific reporting requirements, reducing the number of required data points, and improving consistency with other EU regulations.
• Maintain the double materiality principle, ensuring companies report on both financial materiality (risks to business performance) and impact materiality (their environmental and social impact).

2. CSDDD: Streamlining Corporate Due Diligence Obligations

The CSDDD mandates that companies identify, prevent, and mitigate adverse sustainability impacts within their value chains. The Omnibus Proposal:

• Limits due diligence obligations to direct suppliers only, easing compliance burdens for companies that previously had to monitor entire supply chains.
• Reduces compliance frequency, requiring companies with over 500 employees to assess supply chain impacts every five years instead of annually, with additional assessments only when necessary.

3. EU Taxonomy: Reducing Complexity and Introducing Voluntary Reporting

The EU Taxonomy, which classifies sustainable economic activities, has been criticised for its complexity. The Omnibus Proposal introduces:

• Voluntary alignment for certain companies: Large firms within the CSRD scope (over 1,000 employees and turnover up to €450 million) can report on Taxonomy alignment voluntarily rather than mandatorily.
• Simplified reporting templates, reducing total required data points by nearly 70% and exempting companies from reporting financially immaterial activities (those contributing less than 10% of turnover, capital expenditure, or total assets).
• Adjustments for financial institutions, modifying the Green Asset Ratio (GAR) calculations for banks to exclude exposures related to newly exempt companies.

4. CBAM: Adjustments to the Carbon Border Adjustment Mechanism

The Omnibus Proposal introduces key modifications to CBAM, aiming to ease compliance burdens and better integrate it into the broader EU sustainability framework:

• New de minimis threshold: To reduce the burden on small importers, an annual import threshold of 50 metric tonnes per importer is proposed. This would exempt around 182,000 smaller importers, while still covering over 99% of emissions targeted by CBAM.
• Streamlined administrative processes, allowing companies to reduce CBAM costs when importing from countries with an existing carbon pricing mechanism, preventing double taxation.
• Adjustments to the CBAM pricing mechanism to align with the EU Emissions Trading System (ETS), ensuring fairer cost distribution for affected industries.
• While the CBAM timeline remains on track for full enforcement, the definitive regime is now set to begin in 2026, coinciding with the phase-out of free allowances under the ETS. Additional transitional measures may be introduced to provide businesses with more time to adapt.

5. Omnibus Regulation: Simplified Assurance and Reporting Requirements

The Omnibus Proposal also introduces additional measures to ease compliance:

• Eliminating sector-specific sustainability reporting standards, ensuring consistency and reducing reporting complexity.
• Maintaining limited assurance requirements, preventing an earlier planned transition to reasonable assurance, which would have significantly increased audit-related costs.

How Should Businesses Prepare?

With the Omnibus Proposal set to reshape sustainability reporting, businesses should:

✅  Assess whether they remain in scope under the revised CSRD thresholds – Companies with fewer than 1,000 employees or turnover below €50M may no longer need to comply.

✅  Adjust supply chain monitoring – With CSDDD’s focus shifting to direct suppliers, businesses should revise due diligence strategies accordingly.

✅  Prepare for voluntary Taxonomy reporting – If demonstrating sustainability progress is a competitive advantage, voluntary alignment may enhance credibility.

✅  Monitor legislative developments – The Omnibus Proposal is still under discussion, and companies should stay informed as final decisions emerge.

A Smarter Approach to Sustainability Compliance

If adopted, the Omnibus Proposal would significantly reshape the EU’s sustainability reporting framework, aiming to reduce complexity while maintaining the credibility of ESG disclosures. By postponing deadlines, narrowing CSRD scope, and refining due diligence obligations, the proposal sets out to provide businesses with more time and flexibility to adapt their sustainability strategies.

While these changes help alleviate compliance burdens, sustainability should not be seen purely as a regulatory requirement. Transparent and well-structured reporting strengthens corporate credibility, improves access to financing, and supports long-term resilience in an evolving regulatory landscape. Reliable sustainability data also enables investors and stakeholders to make informed decisions about business risks and opportunities.

It is essential for businesses to stay informed as discussions on the Omnibus Proposal continue. Adjusting internal processes in anticipation of these changes will ensure smoother transitions and greater alignment with future sustainability expectations.

At Zevero, we help businesses navigate regulatory changes like the Omnibus Proposal with automated carbon tracking, integrated reporting, and expert sustainability guidance. Want to learn how we can help your business stay ahead? Let’s talk.