BrazilThe impact of the Omnibus package on CSRD and the EU Taxonomy
The new Omnibus package introduces significant adjustments to key European sustainability regulations, including the Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy. Jatin Budhraja, Director at Nexio Projects, shares what these impacts are and key considerations for businesses.
Unveiled in February 2025, the Omnibus package marks a pivotal attempt to streamline sustainability regulations amidst mounting pressures from businesses and member states. Building on the Draghi Report, which emphasised the need to reduce regulatory barriers to bolster European innovation and economic resilience, Omnibus seeks to simplify key frameworks like the CSRD and the EU Taxonomy (and others such as the CSDDD and CBAM).
Key CSRD updates from the Omnibus package
The stated aim of the Omnibus package is simplification, but it’s essential to understand the specific changes being proposed and how they might affect the business landscape. A breakdown of the most significant updates:
CSRD scope reduction
A central proposal is to significantly reduce the scope of CSRD.
- Companies with fewer than 1000 employees have been proposed to be excluded from CSRD requirements, aligning with the CSDDD requirements. These companies may use voluntary reporting standards, to be formulated based on existing Voluntary Standard for non-listed micro-, small- and medium-sized undertakings (“VSME”).
- Listed SME’s have also been excluded from the scope of CSRD.
- For companies which are not in the Scope of CSRD, the requirements to supply the value chain information have also been proposed to be rationalised.
This shift presents smaller companies with an opportunity to strategically engage with sustainability reporting on a voluntary basis, giving them a competitive advantage. On the other hand, some believe this exclusion poses a risk of reduced transparency across certain value chains, thus impacting more robust sustainability efforts.
Deferred application
Reporting requirements for companies in the second waves of CSRD (filing in 2026) has been proposed to be deferred by two years (if they remain in scope under the new thresholds).
There is sentiment that this deferral provides companies with valuable time to better refine sustainability strategies, data collection, and reporting procedures. Yet, there’s also a school of thought that delaying implementation could potentially slow down the progress on broader ESG goals and create uncertainty for those businesses already invested in CSRD compliance.
ESRS simplification
The number of data points required under the European Sustainability Reporting Standards (ESRS) is expected to be reduced by up to 25%, with a greater emphasis on quantitative data.
It’s been put forward that this eases the reporting burden and calls for a more focused approach to identifying and reporting on the most material ESG factors. It has also been suggested that this reduction in data points could risk oversimplifying sustainability issues and might reduce the amount of information available to investors and other stakeholders.
Comparison of Omnibus versus CSRD
An in-depth comparison of the requirements under the original CSRD versus the revised Omnibus proposal:
Key changes to EU Taxonomy
In terms of the EU Taxonomy, three main changes have been introduced:
- Alignment on thresholds with the updated CSRD threshold, with the opt-ins also allowed for companies with lower than Euro 450 million in turnover;
- Simplification of reporting templates;
- Setting up of materiality threshold to 10% of capital expenditure, operating expenditure, turnover or total assets, as relevant;
Understanding the legislative process of Omnibus
The Omnibus proposal comprises three distinct components, each with its own legislative pathway and timeline:
Core Legislative Amendments
This element involves substantial changes to key regulations such as the CSRD, CSDDD, and CBAM at the primary legislative level (Level 1). The process for these amendments is comprehensive, requiring tripartite negotiations between the European Commission, Council, and Parliament. Given the proposal’s deregulatory nature rather than mere simplification, significant opposition is anticipated.
Consequently, a final decision on these core changes is unlikely before the end of the year.
Delegated Acts and ESRS Simplification
The second component focuses on modifying the EU Taxonomy’s delegated acts and simplifying the European Sustainability Reporting Standards (ESRS) at the secondary legislative level (Level 2). This process is comparatively streamlined, allowing for objections to the proposal but generally moving faster. We anticipate this element to be concluded within the next six months.
Reporting Deferral
The final element proposes a two-year postponement of CSRD and Taxonomy reporting requirements. The European Commission has requested fast-tracking for this component to provide certainty to in-scope companies and allow the European Parliament ample time to deliberate on the Level 1 changes. This deferral is expected to be confirmed relatively quickly, likely within one to two months.
