The EU Omnibus Sustainability Package – proposals to postpone and simplify CSRD, CSDDD, Taxonomy & CBAM

On 26 February 2025 the EU Commission presented the much-anticipated first Omnibus package of reforms, which forms part of the EU’s simplification effort to increase the competitiveness of European industry in the global market.

The Omnibus package proposes various amendments to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy Regulation and some of its accompanying delegated acts, and the Carbon Adjustment Mechanism (CBAM). It proposes significant cuts to the scope of and delays to CSRD in particular.

The changes proposed go far beyond the anticipated 25% cut in regulatory burden.  In the case of the CSRD for instance, 80% of currently in scope companies will drop out altogether, the remainder do not have to comply for a further 2 years and by the time they do, the ESRS reporting standards they report against are expected to have been dramatically cut-back.

It is important to remember that this Omnibus package is not final and still has some distance to travel through the legislative process before it becomes law.

Many businesses have already spent substantial sums preparing to comply with laws that, to protect their competitiveness, may now no longer apply to them.  So whilst some will welcome the delays, others are likely to regard this as having been an unnecessary imposition on valuable business time and effort. Many will be concerned about the longer term implications of these measures for the EU’s reputation as a world leader in this space.

The following is by no means exhaustive but is intended to offer an initial overview of what some of the most significant changes will look like if the proposed legislation is brought into effect in its current form.

 

CSRD

• Scope thresholds for CSRD will be increased, taking around 80% of companies currently captured out of scope according to the Commission, with companies in scope apparently being only those which have 1,000 employees (up from 250) and either:
• EUR50 million turnover (left unchanged); or
• EUR25 million assets (left unchanged)
• CSRD reporting will be postponed (for those not already reporting) by 2 years. This means the next wave of reporting will take place in 2028 for financial years beginning in 2027, for companies that remain in scope
• The principle of double materiality is retained, despite rumours to the contrary before the package was published
• Detailed information from value chain need only be obtained when value chain companies have more than 1,000 employees
• The detailed standards governing CSRD reporting (ESRS) are to be revised via a delegated act to substantially reduce the number of mandatory reporting datapoints
• The increased turnover threshold of EUR450 million that appeared from the leaked draft to be coming has not materialised, except in relation to Article 40a reporting by non-EU ultimate parent companies 

 

Taxonomy

• The same postponement of reporting obligations and amendments to scope thresholds that apply to the CSRD above will also apply to obligations under the Taxonomy Regulation
• Non-financial undertakings that are otherwise in scope but generate less than EUR450 million in turnover may choose not to carry out Taxonomy reporting at all (albeit only if they accept that 100% of their activities are not aligned with Taxonomy sustainability criteria), and if they opt to report they may include KPIs relating to activities that are partially aligned with the sustainability criteria set out in the Taxonomy Regulation
• Further, for entities that choose to report, the inclusion of the KPI relating to OpEx (operating expenditure) will become voluntary (turnover and capital expenditure remain mandatory)
• Non-financial undertakings are not required to assess the compliance of economic activities that amount to less than 10% of either turnover, capital expenditure or operational expenditure. Rather, these KPIs can be reported separately as simply ‘non-material’.

 

CSDDD

• The CSDDD transposition deadline will be extended to 26 July 2027, with the initial phase of application for the largest (first wave) of companies being moved to 26 July 2028. Note, the deadlines for reporting by second and third wave companies are not proposed to change.
• The obligation to ‘put into effect’ a climate transition plan will be replaced with an obligation to ‘adopt’ a transition plan that includes implementing actions which aim for compatibility with the Paris Agreement
• In scope companies will still need to consult stakeholders throughout the due diligence process, but the definition of ‘stakeholders’ will now exclude a number of parties, including consumers, employees of the company’s business partners, national human rights and environmental institutions.
• In an effort to enforce maximum harmonisation, Member States will not be permitted to ‘gold plate’ the due diligence obligations established by the CSDDD
• The obligation to conduct mapping and in-depth analysis will be limited only to direct business partners. Some exceptions to this apply, including where the in-scope company has credible information to suggest this is also needed for indirect business partners
• This departs from the current CSDDD obliges in-scope entities to carry out this process for all direct and indirect business partners
• No last-resort requirement remains to terminate a relationship with a business partner who has failed to address an identified adverse impact.
• The requirement to suspend such a relationship is preserved, albeit without the requirement for stakeholder input that forms part of the current obligation.
• Companies must assess the adequacy and effectiveness of their due diligence measures every five years, rather than annually
• No mandatory financial penalties based on a company’s net global turnover will be imposed. These will be replaced with a requirement that the Commission work with Member States to set guidance for appropriate penalties
• The comprehensive civil liability regime under the current CSDDD will be removed, with existing national general liability regimes serving as the foundation instead.
• This includes the CSDDD’s rule on third-party standing, which will be eliminated in favour of the legal traditions and systems of individual Member States

 

CBAM

• The following elements of CBAM will be delayed:
• Sale of CBAM certificates, delayed from 1 January 2026 to 1 February 2027.
• Obligation for CBAM declarants to hold certificates equivalent to 50% of emissions embedded in imported goods at the end of each quarter, delayed from 1 January 2026 to 1 January 2027.
• Around 90% of importers will now be exempt from CBAM reporting (according to the Commission these account for only around 1% of embedded emissions). The EUR150 value threshold for imports of goods in-scope of CBAM will be removed and importers, including authorised CBAM declarants, will now only be subject to CBAM for imports exceeding 50 tonnes net mass per calendar year.
• CBAM declarations will now be due by 31 August each year instead of 31 May, and the date for surrendering CBAM certificates will be moved from 31 May to 31 August.
• If the carbon price for goods paid in a third country can’t be determined, CBAM declarants will be able to claim a reduction in CBAM certificates surrendered based on yearly default carbon prices.
• CBAM declarants will be required to hold CBAM certificates equivalent to 50% of embedded emissions in imported goods at the end of each quarter (reduced from 80%). The number of CBAM certificates purchased and subject to repurchase during a calendar year will be limited to the number equating to 50% of embedded emissions each quarter, rather than one third of the total purchased.
• CBAM declarants will now have until 30 November to submit repurchase requests (extended from 30 June).