Omnibus Package: the European Commission’s new strategy to streamline corporate sustainability

Understanding the Key Changes, Impacts, and Next Steps of Omnibus I, II, and III

On February 26, 2025, the European Commission presented the Omnibus Package, aimed at simplifying, reducing red tape, and revising regulations related to corporate sustainability, established by the European Green Deal. According to the Commission, these measures seek to boost competitiveness, create a more favourable business environment, generate new jobs, attract investment, and relieve companies from excessive regulatory burdens, all while maintaining a commitment to a more sustainable economy.

Omnibus I

The first phase of the project, known as Omnibus I, focuses on simplifying obligations related to corporate sustainability practices by introducing changes to key regulations, such as the CSRD (Corporate Sustainability Reporting Directive), CSDDD (Corporate Sustainability Due Diligence Directive), CBAM (Carbon Border Adjustment Mechanism), and the EU Taxonomy Regulation. Additionally, the measure adopts a “stop-the-clock” approach, postponing deadlines and changing some obligations.

Regarding the CSRD, which mandates companies to report environmental, social, and governance (ESG) impacts, the proposal suggests a two-year extension for companies classified under Waves 2 and 3. As a result, companies in Wave 2 will be required to submit their 2027 reports in 2028, while Wave 3 companies will need to submit their 2028 reports in 2029.

In terms of the scope of the application, changes have also been proposed to the eligibility criteria based on the number of employees, revenue, and balance sheet. The obligations for Wave 1 companies remain unchanged.

In relation to the CSDDD, which establishes due diligence practices to identify, prevent, mitigate, and address human rights violations and environmental damage, the deadlines for data submission have been postponed from 2027 to 2028. The eligibility criteria for companies have also been adjusted, varying based on workforce size and revenue.

The proposals under Omnibus I also introduce changes to the CBAM (Carbon Border Adjustment Mechanism), a carbon tax mechanism applied to goods exported to the European Union (EU). Key modifications include exemptions for small importers, simplified emission calculations, streamlined reporting and compliance requirements, and enhanced fraud prevention measures.

As for the EU Taxonomy Regulation, the main proposals include the option for voluntary reporting for certain companies, simplified and reduced reporting content, and exemptions for low-relevance financial activities, defined as those representing less than 10% of a company’s revenue, investments, or total assets.

It is estimated that the proposal will reduce the number of companies covered by the CSRD by 80% and those subject to CBAM by 90%. The European Commission’s goal is to cut at least 25% of administrative burdens for companies affected by these regulations and at least 35% for small and medium-sized enterprises (SMEs).

Omnibus II

The second package, Omnibus II, focuses on investment simplification. It proposes changes to the InvestEU Regulation and EFSI (European Fund for Strategic Investments), reducing the frequency and content of reporting requirements, especially for SMEs and other final beneficiaries. The proposed changes aim to reduce bureaucracy by exempting certain rules and reporting obligations, making the definition of SMEs more flexible for specific financial products, among other measures.

These adjustments are expected to save businesses and financial intermediaries approximately €350 million, boosting competitiveness.

Omnibus III

Finally, additional measures under Omnibus III are expected to be presented in the second quarter of 2025. This new package aims to adapt requirements for SMEs and address areas that were not previously covered.

The details of Omnibus III have not yet been publicly disclosed, but expectations are that it will follow the same direction as the previous packages, aiming to reduce red tape, eliminate regulatory overlaps, and improve business competitiveness in Europe.

Concerns

While the Omnibus Package seeks to reduce red tape and simplify regulatory compliance, it has also faced criticism from civil society organizations, which argue that it represents a setback in human rights and environmental protection measures.

Large corporations have also expressed concerns, pointing out that they have already invested significant resources in meeting previously imposed legal requirements, and these sudden changes could create uncertainty and legal unpredictability.

Next Steps

The Omnibus Package proposals presented by the European Commission have been sent to the European Parliament and the Council of the European Union— which represent EU citizens and Member States, respectively—for review and approval.

During this process, proposals can be changed significantly as a result of negotiations. It is important, therefore, for all potentially impacted stakeholders to closely monitor the legislative developments, assess the risks and implications, and define strategies for action and compliance based on different possible outcomes.

Lucas Latorre – https://www.linkedin.com/in/lucas-latorre/

Lawyer, Health, Safety and Environmental – HSE ADVISOR

Basel, Switzerland

April, 2nd, 2025