The EU Omnibus

The omnibus regulation

The President of the European Commission, Ursula von der Leyen, announced in November that the European Commission would be introducing an omnibus regulation to streamline and simplify sustainability legislation. The aim of this regulation is to reduce the administrative burden on businesses and strengthen Europe's competitive position. Since then, the big question has been what this omnibus means for the CSRD, the CSDDD and the Taxonomy Regulation, among other things.

The European Commission presented its proposal on 26 February 2025. The proposal consists of two omnibus packages, the first of which is the most comprehensive. This package will lead to changes in the Corporate Sustainability Due Diligence Directive (CSDDD), the Corporate Sustainability Reporting Directive (CSRD) and the Taxonomy Regulation.

Observations

Key observations from the webinar of 28 February 2025:

• The CSDDD still contains many vague terms, which creates legal uncertainty. It is advisable to keep a close eye on the forthcoming guidelines from the European Commission and developments regarding the CSDDD.
• The Climate Transition Plan no longer needs to be implemented. The amendment to the CSDDD regarding the obligation to prepare a transition plan appears to be aimed at ensuring that reporting is the only requirement. Implementation of the transition plan no longer seems to be included as an obligation. It should be noted that the civil court ruled in Shell's favour to impose an obligation in relation to CO2 emissions.
• The amount of information that can be requested in the value chain is limited. This is linked to the value chain cap in the CSRD, which is being tightened. This value chain cap means that companies covered by the CSRD cannot request more information from companies that are not covered by the CSRD than can be published based on voluntary sustainability reporting standards.
• Fewer companies will have to comply with the CSRD. Under the proposal, only large companies with more than 1,000 employees will be required to include sustainability information in their annual report. This will reduce the number of companies covered by the CSRD by more than 80%.
• The deadline for the first sustainability report has been postponed by two years. The proposal is to adjust the timelines of the current version of the CSRD so that large companies and listed SMEs currently covered by the CSRD will not have to include sustainability information in their first management report until two years later.
  • Large companies will have to report in 2028 on the financial year of 2027 (instead of in 2026 on the financial year of 2025).
  • Listed SMEs will have to report for the first time in 2028 (instead of 2026). 
    
    Note: This does not apply to the first group of companies required to publish a sustainability report under the CSRD in 2025 on the financial year of 2024.
• Reduced reporting requirements under the Taxonomy Regulation. Amendments to subordinate legislation based on the Taxonomy Regulation are expected to reduce the number of data points to be completed by almost 70%. The introduction of a materiality threshold should also help to simplify reporting. For smaller companies, it will be possible to report on activities that only partially meet the criteria of the Taxonomy in order to stimulate transition financing.
• Not all European sustainability regulations will be streamlined. The first omnibus package only includes changes to the CSDDD, the CSRD, the Taxonomy Regulation and the CBAM. For example, companies with industrial activities have other obligations in the European Union, such as the obligation to develop a transformation plan and an environmental management system (see the amended Industrial Emissions Directive 2010/75). These are partly similar to the Duty of Care and the Transition Plan, but there are also differences.

Legislative process

As mentioned above, the changes are only proposals from the European Commission. The European legislative process has only just begun. The proposal may still change in a number of ways. The next important milestone will be when the European Parliament and the Council of the European Union reach agreement on the text.

This webinar was held on 28 February 2025.

For more information on the Omnibus Regulation, see the article by Loes van Dijk in Ondernemingsrecht.