The EU’s proposed Omnibus Legislation: What Businesses Need to Know
Ruby Schofield · Posted on: February 20th 2025 · read
As part of the European Green Deal, a series of directives were passed by the EU to force businesses to address climate change and report carbon emissions. The goal is to comply with the climate initiatives of the 2015 Paris Agreement, an international treaty signed to hold countries accountable in their commitment to mitigating climate change.
The EU addressed this through three key legislative actions:
- EU Taxonomy
- Corporate Sustainability Reporting Directive (CSRD)
- Corporate Sustainability Due Diligence Directive (CSDDD).
These actions are simplified below:
Three Key Legislative Actions
- In 2020, the European Union introduced the EU Taxonomy for Sustainable Activities. This classification system was designed to help businesses and investors identify which company activities are recognized as environmentally sustainable.
- In 2023, the CSRD was created with the goal of offering a company’s stakeholders valuable insights into the company’s sustainability impacts, risks, and opportunities. The practical challenges of CSRD reporting and data collection have become increasingly apparent since the legislation was published, and even more so following the release of the first CSRD reports in January 2025. As a result of criticisms from companies within the scope of the directive, the publication of the EU Compass to Regain Competitiveness (Competitiveness Compass) on 29th January 2025 and the increasingly complex and evolving political landscape, there are calls for simplification of the reporting requirements.
- The final EU legislative requirement is the CSDDD, which was adopted in May 2024. CSDDD imposes additional reporting requirements from several EU and non-EU companies to conduct environmental and human rights due diligence across their operations, subsidiaries, and parts of their value chains. This received significant criticism, notably around the disproportionate requirements for SMEs, over complexity in regards to transparency and risk management of the supply chain and vagueness of scoping requirements. There were also concerns regarding the ability to use CSDDD as a marketing tool and encouraging companies to ‘tick boxes’ rather than actually drive meaningful change in their value chains.
To reduce the regulatory and administrative burden on companies in scope, the European Commission (EC) has published a series of omnibus proposals. The initial "simplification omnibus" package is set to be released on 26th February 2025. It will introduce significant changes aimed at consolidating existing EU corporate sustainability reporting requirements, avoiding duplication in the collection and reporting of ESG data as there is currently a significant degree of overlap and interconnectivity. This will involve the streamlining of the EU Taxonomy, CSRD and CSDDD.
To ensure regulations are proportionate to a company’s size, a new definition for small mid-caps could be introduced. This category, which falls between SMEs and large entities, will benefit thousands of businesses across the EU by providing a more tailored and simplified regulatory framework, similar to the approach taken for SMEs.
Our experts' thoughts
"To ensure regulations are proportionate to a company’s size, a new definition for small mid-caps could be introduced. This category, which falls between SMEs and large entities, will benefit thousands of businesses across the EU by providing a more tailored and simplified regulatory framework, similar to the approach taken for SMEs."
What should businesses do now?
We will not know the full impact on the CSRD and CSDDD until the omnibus is made public in February. Once it is released, we expect there will be significant international implications.
The Trump administration’s rejection of climate reporting and ESG policies in the United States has certainly set a tone around the prioritization of market-driven approaches over regulatory mandates.
If the EU were to reconsider its own regulatory stance on climate reporting, this could certainly create a ripple effect internationally and signal other countries to pause implementation of their own commitments.
Currently, there are no changes to the reporting requirements of any of the three EU legislations. While reporting standards and application requirements may change, companies must continue complying with existing obligations.
Businesses should continue to focus on:
- Double materiality assessments
- Implementing effective ESG data capture and increasing the controls in place around these processes
- Keeping up to date with developments in relation to EU sustainability reporting requirements
By taking these steps, companies can ensure compliance with current regulations whilst also preparing for future requirements.
Sustainability & ESG
Read more about Sustainability & ESGRead moreCurrently, there are no changes to the reporting requirements of any of the three EU legislations. While reporting standards and application requirements may change, companies must continue complying with existing obligations.
