Omnibus – A new proposal to simplify sustainability regulations: What businesses need to know?

At the end of February 2025, the European Commission introduced the Omnibus proposal, aimed at simplifying regulations related to sustainability reporting and corporate due diligence. If approved, Omnibus will reduce administrative burdens for businesses, enhance competitiveness, and encourage investment within the European Union (EU).

Key changes in the Omnibus proposal (expected):

Corporate sustainability reporting directive (CSRD):

• Applicable only to companies with more than 1,000 employees, narrowing the previous broader scope.
• Significantly reduces the number of companies required to conduct sustainability reporting, focusing on large enterprises with substantial environmental impact.

Corporate sustainability due diligence directive (CSDDD):

• Due diligence requirements will apply primarily to first-tier suppliers.
• Implementation postponed to mid-2028.
• Companies will be required to conduct partner assessments once every five years, instead of annually.

Carbon Border Adjustment Mechanism (CBAM):

The minimum CBAM reporting threshold is proposed to increase to 50 tons per year, exempting approximately 182,000 small importers from compliance requirements.

Impact on businesses:

If passed, the Omnibus proposal could significantly reduce the compliance burden for businesses, particularly small and medium-sized enterprises (SMEs). However, the revised scope means that larger corporations will still be required to comply with existing sustainability reporting and due diligence regulations.

Many businesses and trade organizations have welcomed this proposal, believing it could improve the business environment and lower compliance costs.

What should businesses do?

Since Omnibus is still a proposal, businesses should closely monitor legislative developments and adjust their strategies accordingly. If approved, companies may benefit from reduced administrative procedures but must continue to maintain high sustainability standards to meet partner and international market expectations.

Omnibus represents a notable step by the EU in balancing economic growth and environmental protection. While it is not yet legally binding, businesses should proactively stay informed and prepare for potential regulatory changes.

Next steps for the Omnibus proposal:

The Omnibus proposal is currently under review through the EU’s legislative process, involving both the European Parliament and the European Council. If approved, it will become a Directive, requiring EU member states to transpose it into their national legal systems. This means that each country will have its own timeline and approach for implementing the new regulations, leading to certain variations in application across different markets.

The Omnibus proposal represents a significant step in the EU’s efforts to balance economic growth with environmental protection. Although it has not yet come into effect, businesses should proactively stay informed and prepare for potential regulatory changes in the future.