A Breakdown of the EU Omnibus Proposal and Its ESG Impacts

To bolster European competitiveness and alleviate regulatory pressures on businesses, the European Commission introduced the “Simplification Omnibus” package in February 2025. This initiative proposes significant amendments to existing Environmental, Social, and Governance (ESG) regulations, notably affecting the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D). While stakeholder opinions have been mixed, businesses should view this simplification package as an opportunity to better prepare for eventual mandatory ESG reporting.  

Key Proposed Changes 

Corporate Sustainability Reporting Directive (CSRD):  

1. Reporting Threshold Changes: The proposal suggests raising the thresholds for companies required to comply with the CSRD. Specifically, companies with over 1,000 employees and either a turnover exceeding €50 million or a balance sheet total over €25 million would be obligated to report, which would exempt many previously included small and medium-sized enterprises (SMEs).  
2. Delayed Implementation: The Omnibus proposes that initial reporting deadlines be postponed for two years. Companies previously expected to submit their first reports in 2026 would now have until 2028, providing companies with critical extensions to align with the new standards. 
3. Simplified Reporting Standards: The obligation to adopt sector-specific sustainability reporting standards by June 2026 has been removed. Instead, companies will align with broader global reporting standards. This measure aims to reduce complexity and enhance consistency, which has been a notable pain point for many reporting organizations. 

Corporate Sustainability Due Diligence Directive (CS3D): 

1. Focus on Direct Suppliers: Due diligence obligations are proposed to be limited to direct suppliers only, rather than the entire supply chain. While this change has raised concerns about the potential neglect of indirect supplier impacts, it does significantly simplify the reporting process for Scope 3 emissions, which some companies find challenging to track. 
2. Extended Assessment Intervals: The frequency of mandatory assessments for supply chain impacts would be reduced from annual reviews to once every five years, lessening the administrative load on companies.  

EU Taxonomy:  

1. Voluntary Reporting for Smaller Organizations: Companies with over 1,000 employees but less than €450 million in turnover can opt to report taxonomy information voluntarily, rather than being mandated to do so. This relieves some pressure on smaller organizations that have fewer resources to dedicate to ESG reporting.  
2. Simplified Reporting Templates: The number of required data points in reporting templates would be reduced by over half. Companies would be exempt from reporting on financially immaterial activities, which contribute less than 10% to turnover, capital expenditure, or total assets.  
   

What This Means for Companies 

The European Commission asserts that these amendments are designed to alleviate bureaucratic pressures that may hinder the competitiveness of European businesses, particularly SMEs, in the global market. By simplifying reporting obligations and focusing on direct suppliers, the proposed changes will make compliance more manageable and cost-effective for companies. 

Business leaders should view the Omnibus package as an opportunity to better prepare for full-scope ESG reporting and avoid potential future financial or legal penalties. The reduction in scope for smaller organizations provides crucial time to find reporting processes that don’t overload administrative capabilities. Larger organizations, while able to leverage more carbon accounting resources, have complex supply chains and should use the delay in Scope 3 reporting to develop emissions tracking for their value chains. The world of ESG reporting is always evolving. Savvy business leaders won’t procrastinate on ESG reporting but will continue to meet current standards while anticipating and preparing for future reporting requirements. 

Fortunately, carbon accounting technology is also advancing to meet reporting needs. With incoming regulations and supply chain reporting, manual calculations just won’t cut it. Organizations should invest now in carbon accounting software and streamlined ESG data processes. For small organizations that are ready to get organized ahead of mandatory reporting, Carson is a great tool. This automated carbon accounting assistant requires minimal training and implementation, enabling small teams to generate compliant sustainability reports without straining resources. For larger entities, software like Salesforce Net Zero Cloud enables data tracking for suppliers, subsidiaries, and franchises all in a single source of truth. The right carbon accounting software can be the difference between almost effortless reporting and a massive data headache.  

The Bottom Line 

The European Commission’s “Simplification Omnibus” package will alter the deadlines and required data for existing ESG reporting directives. Despite the delay in mandatory reporting, industry leaders should continue pushing forward their environmental reporting processes and preparing for eventual full scope ESG reporting.