European Commission Omnibus proposal

The European Commission published its Omnibus proposal in February 2025, aiming to streamline rules on sustainability currently contained in the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy. These changes are not yet confirmed, with approval required from the European Parliament and the Council of Europe. This creates an unclear picture of current requirements for companies.

However, the Council has already called for reporting burdens to be reduced and for the proposals for simplification to be prioritised, and formally approved the ‘stop-the-clock’ proposal on 14 April 2025. This proposal delays the dates of application for certain corporate sustainability reporting and due diligence requirements, as well as the transposition deadline of due diligence provisions. Additionally, the Commission has instructed the European Financial Reporting Advisory Group (EFRAG) to commence work to simplify European Sustainability Reporting Standards (ESRS) in a letter dated 28 March 2025. In this letter, the Commission asked EFRAG to issue technical advice by 31 October 2025.

Key changes to CSRD:

• A delay in reporting timelines, allowing companies more time to prepare

• A revision and simplification of standards requirements, focusing on data points considered most important for sustainability reporting. For example, prioritising quantitative data points over qualitative

• The introduction of voluntary reporting standards for those companies that fall outside of CSRD requirements

• A reduction in data requirements from businesses in the value chain, not requiring information to be obtained from businesses with fewer than 1,000 employees (as long as they are only reporting voluntarily)

For companies within the new thresholds, it would be beneficial to develop processes and systems for collecting and managing quantitative data. This will align with the Commission’s planned priorities under the simplified ESRS, and robust data will aid work to improve sustainability performance.

For those companies that may no longer need to produce a CSRD report, consideration should be given to the approach to sustainability moving forward. This could include deprioritising sustainability completely in the absence of compliance requirements; however, this is not likely to meet stakeholder expectations. Companies could choose to continue to produce a CSRD-aligned report, or tailor their approach to sustainability and reporting to business and stakeholder-specific priorities and strategies. For UK companies, work undertaken to prepare a double materiality assessment could in any event be helpful in anticipation of the new UK Sustainability Reporting Standards.

Key changes to CSDDD:

• Focusing the scope of due diligence requirements to focus on tier 1 suppliers and business partners

• Reduced scope of data requests to SMEs

• Removal of EU-wide civil liabilities and removal of the requirement for EU member states to allow civil society organisations to represent victims in court

• Changing the approach to penalties to ensure a fair and consistent approach across EU member states

Key changes to EU Taxonomy:

• EU Taxonomy only mandatory for the largest companies – those with either 1,000 employees or more, or an annual turnover of 450 EUR million or more

• Voluntary and partial alignment Taxonomy reporting for large companies with a turnover of less than 450 EUR million, enabling companies to demonstrate their sustainability efforts

• Simplifying reporting templates and complex ‘Do no significant harm’ criteria

• Clarification of issues with Appendix C related to the application of exemptions from EU environmental laws that affect compliance with the Taxonomy criteria

If you would like to discuss any of the topics in this article and how your business could be affected, get in touch with our team at info@forge-esg.com. 

Jonathan Chibafa

Founder & Chief Legal Officer