Omnibus package – incoming changes in ESG reporting
The European Commission's proposals to simplify ESG regulations as part of the so-called Omnibus Package published on February 26th 2025 have sparked a wide debate on their impact on the functioning of companies. The main objective of the changes is to reduce the administrative burden on enterprises and improve their competitiveness.
However, there is a risk that reducing ESG reporting obligations could lead to a loss of availability of key ESG data for investors in the long term and difficulties in monitoring sustainability progress.
ESG deregulation – intentions and consequences
Both legislative packages – Omnibus I and Omnibus II – are aimed at simplifying the requirements for companies, especially in the field of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDD). The key assumption is to reduce administrative obligations by about 80%.
The new regulations will apply only to the largest enterprises which:
employ over 1000 employees
and generate annual revenues exceeding EUR 50 million and/or having a balance sheet total of more than EUR 25 million.
All other companies will be able to report voluntarily (using the VSME standard), which will ultimately be issued in the form of a delegated regulation.
The reporting schedule has also been changed. Companies that were supposed to publish a sustainability report for the first time in 2026 or 2027 will be given additional two years to adapt to the new requirements.
In addition, sector-specific reporting standards have been removed, meaning that companies will not have to adapt reports to industry-specific guidelines.
Regulatory perspective – what's next?
The Omnibus package also provides for the simplification of reporting in the field of:
EU Taxonomy - Disclosures regarding the Taxonomy will be mandatory only for companies that both have more than 1000 employees and annual revenues above EUR 450 million.
CBAM (Carbon Border Adjustment Mechanism) – 90% of importers (mainly SMEs and individuals) have been exempted from the CBAM obligation.
Audit of the report - The requirement for “limited assurance” will remain in force. ESG reports will be subject to limited verification by auditors (less rigorous control, based on the analysis of available information and the assessment of the probability of errors).
CSDDD requirements – Risk assessment in the activity chain will focus on direct business partners (Tier 1) with at least 500 employees hired.
Conclusion
The proposed changes to ESG reporting as part of the Omnibus Package are an important step towards simplifying regulations and reducing the administrative burden on enterprises. For many companies, this means reduced costs and greater flexibility in terms of sustainability activities.
However, the limitation of ESG reporting also comes with serious risks. It may lead to a decrease in transparency on the markets, limit the access of smaller companies to financing and weaken the effectiveness of the EU's climate policy. A key challenge for businesses will be to find a balance between the benefits of deregulation and the long-term sustainability goals.
Regardless of future legislative decisions, companies should continue to pursue ESG strategies, even if they are not formally required to report. Sustainable development continues to be an increasingly important element of business strategy, which not only generates cost reduction by increasing the efficiency of processes, attracts investors, but also allows for building long-term value and resilience to market changes.
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Author: Sylwia Mindykowska, Sustainability Consultant at EFF