The European Union's commitment to climate action and sustainability is unwavering, yet it is now balanced with a clear ambition to reduce administrative burdens and enhance business competitiveness. This dual objective is at the heart of the EU Omnibus Simplification Package, a set of legislative proposals designed to refine and simplify existing sustainability regulations. For sustainability managers, financial professionals, and corporate leaders, understanding this package is not just a matter of compliance, it is a strategic necessity.
This comprehensive guide serves as a manual to navigate the complexities of the Omnibus proposals, with a focused lens on the Corporate Sustainability Reporting Directive (CSRD). We will explore the historical context, detail the specific changes, and outline a strategic roadmap to help your organization prepare for the future. By proactively managing these shifts, you can transform a period of regulatory change into an opportunity for strategic growth and enhanced climate performance.
The Omnibus package did not emerge in a vacuum but is the product of a concerted effort by the European Commission to respond to feedback from businesses regarding the complexity and administrative load of the EU's sustainability framework. The journey began with the Commission's overarching goal to cut red tape by 25% for businesses, with a more ambitious target of 35% for small and medium-sized enterprises (SMEs).
On February 26, 2025, the European Commission published the first Omnibus I Package, initiating a formal legislative process to amend several key sustainability directives. These proposals were then sent to the European Parliament and the Council of the EU for review and negotiation. A significant early step was the publication of the "Stop-the-Clock" Directive on April 16, 2025, which was a key component of the package designed to immediately address the timelines for CSRD reporting. Member States were subsequently given a deadline of December 31, 2025, to transpose this directive into their national laws.
By June 2025, both the European Parliament's rapporteur and the Council of the EU had published their respective negotiating positions, which included extensive amendments to the Commission's original proposals. These different positions set the stage for the crucial "trilogue" negotiations—the final phase of the legislative process where the three institutions will work to reach a compromise on the final text of the package.
Understanding this timeline is crucial because it highlights that the legislative process is still in motion. The ultimate form of the Omnibus package is not yet finalized, and the details discussed throughout this guide are based on the latest proposals and negotiation stances. Remaining vigilant and adaptable is therefore the best approach.
The core of the Omnibus package is its proposed amendments to the CSRD, which are intended to make sustainability reporting more proportionate, flexible, and targeted. The changes can be categorized into three main areas: adjustments to reporting scope and deadlines, simplification of reporting standards, and clarifications on value chain reporting.
One of the most impactful changes proposed is the significant reduction in the number of companies required to report under the CSRD. The Omnibus package suggests raising the employee and financial thresholds for what constitutes a "large undertaking." A large undertaking is proposed to be defined as an entity with an average of over 1,000 employees that also meets specific financial criteria, such as a net turnover of over €50 million or a balance sheet total exceeding €25 million.
This change is expected to remove an estimated 80% of companies from the scope of mandatory CSRD reporting, a figure that is central to the package's goal of reducing administrative burdens. For companies with fewer than 1,000 employees, the Omnibus proposes a separate, voluntary reporting standard based on the work of EFRAG (European Financial Reporting Advisory Group). This voluntary framework is designed to help smaller businesses respond to data requests from their larger, reporting partners without being overwhelmed by the full CSRD framework.
Equally significant are the proposed delays to reporting deadlines. This "stop-the-clock" provision is a key relief measure. Wave 2 companies (large EU undertakings not previously subject to the NFRD) will see their reporting deadline pushed back by two years, from 2026 to 2028 for the 2027 financial year. Similarly, Wave 3 companies (listed SMEs) will have their deadline moved from 2027 to 2029 for the 2028 financial year. It is important to note that these delays do not apply to Wave 1 companies (those already reporting under the NFRD) or to non-EU companies with significant EU turnover, whose obligations remain unchanged. This staggered approach gives a clear indication that while the EU is committed to sustainability reporting, it is also prioritizing a more manageable and phased implementation for businesses.
The Omnibus proposals are also designed to simplify the European Sustainability Reporting Standards (ESRS) themselves. Feedback from businesses highlighted that the initial ESRS framework was complex and highly detailed, creating a substantial reporting challenge. The Commission's proposals, along with the recent "quick fix" amendments, are directly addressing these concerns.
One of the most significant changes is the proposal to remove the requirement to develop and implement sector-specific standards. This change is a direct response to the concern that sectoral standards would introduce a vast number of new data points, increasing the reporting burden. Instead, the focus will remain on the general ESRS, with targeted clarifications and simplifications.
The Omnibus also brings relief for companies that began reporting for the 2024 financial year (Wave 1). These companies can continue to apply certain phase-in provisions that were previously only available to smaller entities. This means they are not required to disclose certain financial effects related to topics like climate change, pollution, and biodiversity for the 2025 and 2026 financial years. This measure provides a crucial window for these early adopters to refine their reporting processes before all requirements are phased in.
The proposals also aim to provide more clarity on two critical aspects of sustainability reporting: the value chain and assurance. The Omnibus package introduces a "value chain cap" that is particularly relevant for smaller companies. This cap limits the extent of information that large, CSRD-reporting entities can demand from their smaller partners in the value chain, provided those partners are not themselves subject to CSRD reporting. This is intended to mitigate the "cascade effect" of reporting, where large companies inadvertently pass on their reporting burden to their smaller suppliers.
Regarding assurance, the package proposes to remove the possibility of moving from a limited to a reasonable assurance requirement. Instead, the European Commission plans to publish targeted assurance guidelines by 2026, which will provide more clarity and standardization for auditors and reporting companies alike. This approach suggests a move towards a more pragmatic and standardized assurance process.
While the CSRD is the primary focus of the Omnibus package, its influence extends to other key pillars of the EU's sustainability framework, including the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy Regulation.
For the CSDDD, the proposals suggest a one-year delay to the first application date, moving it to July 2028. Furthermore, the package introduces a more pragmatic, risk-based approach to due diligence. Instead of requiring companies to scrutinize their entire, complex value chain from the outset, the due diligence obligation would initially be focused on direct business partners. Assessments of indirect value chains would only be necessary if credible evidence of adverse impacts is identified. This targeted approach is designed to make the due diligence process more manageable and effective.
The EU Taxonomy Regulation is also slated for simplification. The Omnibus proposes to reduce the number of required data points by approximately 70%, easing the reporting burden for companies <Waro.io>. Additionally, a significant change is the introduction of "partial alignment" reporting, which allows companies to demonstrate their efforts and progress toward full alignment even if they do not yet meet all the detailed criteria. This provides greater flexibility and a more realistic pathway for companies in the transition to a sustainable economy.
The legislative changes introduced by the Omnibus package, while aimed at simplification, do not diminish the importance of robust sustainability practices. For sustainability managers and corporate leaders, these changes represent an opportunity to build a more resilient and strategic approach to climate action. Navigating this evolving landscape requires a clear, forward-looking manual.
One of the most persistent challenges in sustainability reporting is the collection of high-quality, granular data, particularly for complex areas like Scope 3 emissions. The Omnibus package's focus on reporting simplification and its acknowledgment of the burden on the value chain highlight that data management remains a core challenge. Companies must still gather and process vast amounts of information to accurately report on their environmental impacts.
This is precisely where technology becomes a critical ally. ClimateSeed’s GEMS software suite is specifically designed to streamline this process. It provides a centralized platform for data collection, automated calculations, and reporting, ensuring that you can efficiently manage the required metrics and maintain a high standard of data integrity, regardless of the specific reporting requirements. By digitizing your data management, you can reduce the manual workload, improve accuracy, and free up your team to focus on strategic initiatives.
The two-year delay for many companies is a gift of time. Instead of simply pushing back a compliance deadline, forward-thinking leaders should use this period to move beyond a compliance-only mindset and develop a comprehensive, long-term climate strategy. The regulatory changes may simplify the "how," but the fundamental "why" of sustainability remains.
ClimateSeed's specialized consulting services are tailored to help you build this strategic roadmap. Our experts work with you to understand your unique challenges, develop a robust decarbonization strategy, and integrate climate action into your core business model. We can help you navigate the complexities of double materiality assessments, set science-based targets, and prepare for future regulatory changes with confidence.
In a world of evolving reporting standards, demonstrating tangible climate action is more important than ever. The Omnibus package emphasizes simplification, but the expectation for companies to contribute to climate goals remains. A credible climate strategy includes not only measuring and reducing emissions but also addressing residual emissions through high-quality carbon projects.
ClimateSeed’s portfolio of verified carbon projects offers a transparent and impactful way for your organization to finance climate action. We provide access to a diverse range of projects, from nature-based solutions to renewable energy initiatives, all of which are aligned with internationally recognized standards. By investing in these projects, you can complement your in-house reduction efforts and demonstrate genuine climate leadership, reinforcing your commitment to a sustainable future.