EU Omnibus proposal: Essential insights and how to navigate the upcoming changes

On Tuesday, February 26th, 2025, the European Commission released its package of simplification omnibus I and II proposals. The new legislation has been introduced with the aim of simplifying corporate sustainability reporting, significantly impacting current sustainability reporting as set out in the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), EU Taxonomy Regulation and Carbon Border Adjustment Mechanism (CBAM). 

Key proposed changes 

Corporate Sustainability Reporting Directive (CSRD) 

• Timeline: The entry into application for large companies and listed SMEs (wave 2 and 3) will be postponed by two years.  

• Scope: Reporting is required only by large corporations with more than 1,000 employees and either a turnover of over EUR 50 million or a balance sheet above EUR 25 million. This new CSRD scope threshold reduces in-scope companies by 80%, similar to the CSDDD.  

• Reporting standards: The Commission wants to revise the current delegated act of the European Sustainability Reporting Standards (ESRS), aiming to reduce the number of data points and providing further clarifications. There will be no sector-specific standards.  

• Assurance: The requirement for limited assurance will remain, but there will be no shift to reasonable assurance in the future.  

• Double materiality: No changes are planned. Companies that remain in scope of the CSRD will have to report on both dimensions — financial and impact materiality. 

• Voluntary reporting: Aiming at companies no longer in scope of the CSRD, the commission plans to adopt a delegated act on a voluntary reporting standard, based on the Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME) developed by the European Financial Reporting Advisory Group (EFRAG). 

Corporate Sustainability Due Diligence Directive (CSDDD) 

• Timeline: Postponed by one year, with the transposition deadline moved to July 26th, 2027, and first year of application effective as of July 26th, 2028.  

• Scope: Limits the information large companies can request from SME and small mid-cap business partners to that laid out in the CSRD’s VSME. 

• Simplification: Reduction of the frequency of assessments (from annual to every five years) and simplification of other aspects of sustainability due diligence requirements (in-depth assessment only with direct suppliers), as well as aligning the climate transition plan requirements with the CSRD. 

• Civil liability: Removed the harmonized EU conditions for civil liability, which has been left for national law to define.  

EU Taxonomy Regulation 

• Scope: Reporting will be required for companies that fall under the new CSRD scope and additionally exceed a net turnover of more than EUR 450 million. The proposal introduces an “opt-in” regime for those below the threshold of EUR 450 million in net turnover. 

• A financial materiality threshold will be introduced (e.g., exempting economic activities that are not exceeding 10% of the companies’ total turnover or CAPEX). 

• Simplification: Reporting templates are being reduced and Do No Significant Harm (DNSH) criteria (related to pollution and chemicals) are being simplified. 

• The Green Asset Ratio (GAR) for banks is being revised. 

• The commission wants to publish draft amendments for public consultation before final adoption. 

Carbon Border Adjustment Mechanism (CBAM) 

• Scope: The new cumulative annual threshold of 50 tons maximum (corresponding to approximately 80 tons of CO2 eq.) will exempt 90% of importers from CBAM. 

• Simplification: Emission calculations and reporting requirements have been simplified.  

• Measures strengthening anti-abuse provisions and anti-circumvention strategies with national authorities have been introduced. 

Next, the legislative proposals will be submitted to the European Parliament and Council for review and adoption. The proposed changes to the CSRD, CSDDD and CBAM will enter into force after reaching an agreement and the publication in the EU Official Journal. 

How to deal with the uncertainty now?  

Many companies are in the middle of their CSRD roadmap, having invested time and resources in reporting preparation, double materiality assessments, gap analysis and data collection efforts.  

At Sphera we believe that, especially now, it is crucial to stay proactive instead of pausing current ambitions to wait for the shifting regulatory landscape to stabilize. There are more and more global regulations obligating corporate sustainability reporting, and even with the currently proposed simplifications and postponements in the EU, forward-thinking companies will have to integrate sustainability into their business strategy sooner rather than later. The ESRS will remain the gold standard for sustainability reporting, enabling companies to create value and build competitive advantage. This will inevitably become a task that goes beyond compliance.