Omnibus Initiative: What Changes is the Commission Proposing?

Objectives of the Omnibus Initiative

With its proposals, the Commission seeks to significantly reduce administrative burdens – by at least 25% for all companies and 35% for small and medium-sized enterprises (SMEs) by the end of the current term. The first Omnibus Package includes legislative amendments to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy Regulation, and the Carbon Border Adjustment Mechanism (CBAM).

These measures aim to simplify regulatory requirements, ease the burden on SMEs, and unlock up to €50 billion in investments.

Overview of the Proposed Changes

Below, we summarize the proposed amendments related to sustainability reporting, due diligence, and CBAM.

1. Sustainability Reporting

A key element of the proposed changes concerns sustainability reporting. It is important to note that, according to the current proposal, the principle of double materiality under the CSRD would remain unchanged.

The key adjustments include:

• Reduced CSRD scope: Around 80% of companies would be exempt from reporting obligations. Only large companies with more than 1,000 employees (annual average) and either at least €50 million in revenue or €25 million in total assets would be required to report.

• Relief for smaller companies: To mitigate the so-called "trickle-down effect" – the indirect impact of reporting obligations on (smaller) companies that are not in scope of the CSRD – the information requests for companies with fewer than 1,000 employees would be limited to the scope of the VSME standard. This standard for very small, small, and medium-sized enterprises includes simplified reporting requirements.

• Postponement of reporting obligations by two years: Companies originally required to report from 2026 or 2027 would receive an extension until 2028.

• Reduction of data points: The European Commission plans to significantly reduce the number of mandatory ESRS data points by:

o Eliminating data points deemed less relevant for general sustainability reporting,

o Prioritizing quantitative over qualitative data points,

o Providing a clearer distinction between mandatory and voluntary data points.

• Suspension of sector-specific ESRS standards: The European Commission proposes to permanently suspend the development of sector-specific ESRS standards.

• Auditing of sustainability reports: The transition from limited assurance to reasonable assurance for ESRS reports would be eliminated.

• Simplification of EU Taxonomy reporting: The reporting obligation would be limited to the largest companies (>1,000 employees, >€450 million in revenue), while smaller companies could voluntarily report on activities that are at least partially aligned with the taxonomy.

• Streamlining of EU Taxonomy templates: Reporting templates would be reduced by nearly 70% of data points, and companies would be exempt from assessing the taxonomy eligibility and alignment of their economic activities if these are not financially material to their business. In addition, simplifications are planned for the complex taxonomy compliance assessment, specifically the "Do No Significant Harm" (DNSH) criteria.

2. Due Diligence in the Supply Chain (CSDDD)

The European Commission is also proposing far-reaching changes to the Corporate Sustainability Due Diligence Directive (CSDDD). The key amendments include:

• Adjustment of deadlines: EU Member States would have until July 26, 2027, to transpose the CSDDD into national law – one year later than originally planned. Large companies would be required to comply with the CSDDD’s due diligence obligations starting on July 26, 2028, giving them an additional year. Furthermore, the deadline for adopting general EU due diligence guidelines would be brought forward to July 26, 2026.

• Reduced scope of due diligence obligations: Companies would be required to focus primarily on their direct suppliers when conducting due diligence. However, a comprehensive due diligence process beyond direct business partners would still be necessary if credible indications of risks emerge further down the supply chain. Full supply chain transparency would therefore remain a key pillar of sustainability management.

• Simplification of due diligence obligations: The effectiveness of due diligence measures would be assessed once every five years instead of annually. However, companies would still be required to adjust their assessments and measures on an ad-hoc basis whenever new relevant information becomes available or if existing measures prove ineffective. The obligation to terminate business relationships as a last resort would be removed – instead, such relationships would only need to be suspended.

• Stakeholder engagement: Affected companies would only be required to engage in dialogue with employees, their representatives, and individuals or communities whose rights or interests are directly affected – or could potentially be affected – by the company’s products, services, or business activities, including those of its subsidiaries and business partners. Stakeholder engagement would need to be directly linked to the relevant stages of the due diligence process. In addition, stakeholder engagement would be required only for selected aspects of the due diligence process, particularly in the following phases:

o Identifying impacts

o Developing prevention and corrective measures

o Designing remediation measures

• Reduced requirements for SMEs: Large companies would only be allowed to request information from SMEs and small mid-caps (up to 500 employees) that is included in the voluntary sustainability standard under the CSRD (VSME standard). Additional information could only be requested if it is essential for companies’ risk analysis and cannot be obtained otherwise.

• Changes to civil liability rules: The harmonized EU-wide civil liability rules would be removed, leaving it up to member states to determine whether their national liability laws take precedence over foreign regulations. Additionally, the obligation for member states to enable collective lawsuits by trade unions or NGOs would be eliminated.

• Further harmonization and alignment with existing EU regulations: The requirements for climate transition plans would be aligned with the CSRD. Overall, due diligence obligations would be further harmonized to ensure a level playing field across the EU. Additionally, the review clause regarding the potential inclusion of the financial sector would be removed.

3. Carbon Border Adjustment Mechanism (CBAM)

The proposed CBAM amendments aim to reduce administrative burdens and ensure fairer trade:

• Relief for small importers: Companies importing less than 50 tons of in-scope CBAM goods per year would be exempt from the obligations. This measure would affect approximately 182,000 companies (90% of importers) and ensure that, according to the European Commission, over 99% of covered emissions would still be accounted for.

• Simplified compliance for affected businesses: For importers still falling under CBAM, the proposed changes aim to ease compliance with reporting obligations. The goal is to streamline customs declarant registration, emissions calculation, reporting requirements, and the fulfillment of financial obligations.

• Stronger enforcement to prevent misuse: Targeted measures in cooperation with national authorities would help prevent the circumvention and manipulation of CBAM rules.

• Future expansion: CBAM is expected to be extended to additional sectors and downstream products. A corresponding legislative proposal is anticipated in 2026.

Further details on the planned changes under the Omnibus Initiative can be found in a Q&A overview published by the European Commission.

Next Steps

The proposals have been submitted to the European Parliament and the Council of the European Union. Changes to the CSRD, CSDDD, and CBAM will only take effect once an agreement has been reached between the legislators and the final text has been published in the Official Journal of the EU. The Commission is pushing to fast-track the process, particularly regarding deadline extensions for disclosure obligations and the implementation of due diligence requirements.

The delegated act amending the Taxonomy Regulation will be adopted following a public consultation and will enter into force after the review period of the European Parliament and the Council of the European Union has ended.

At IntegrityNext, we are closely monitoring the Omnibus Initiative and will keep you informed about the latest developments. If you have any questions about the European Commission’s proposed changes or our CSRD, CSDDD, and CBAM solutions, please contact us or schedule a demo.

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