The EU Commission unveils the first Omnibus package to make businesses more competitive

The European Commission launched a vigorous simplification package as part of the toolkit to respond to the US’s new positioning. The first vessel of the “Omnibus fleet” that the EU Executive announced in early 2025 to foster EU business competitiveness and production in the short term includes legislative changes to the Due diligence requirements and the Directive on corporate sustainability reporting. The EU Commission also proposed a delegated regulation amending the rules related to taxonomy and other changes to the regulation that established the Carbon border adjustment mechanism.

The targeted revision of these pieces of legislation indulges the EU company’s call to reduce red tape on environmental sustainability reporting.

SMEs de-listed from some requirements in Csrd

The Directive on corporate sustainability reporting (Csrd) was adopted in January 2023. In 2024 and 2025, it started to apply to large companies constituting public interest entities that are already subject to the Non-Financial Reporting Directive (NFRD) and to large companies not yet subject to the NFRD.

The proposal postpones the sustainability reporting requirements for all companies falling within the scope of the Directive by two years, with compliance required from the financial year 2025 or 2026.

This postponement is part of a separate regulation, which the co-legislators would have to adopt as a priority (the so-called stop-the-clock proposal) to give themselves time to adopt the other changes.
To fall within the scope of the Directive, a company must have more than 1,000 employees on average during the financial year. This removes the requirement for listed SMEs, which will instead be subject to optional reporting requirements based on guidance from the European Commission.

As far as the application to subsidiaries is concerned, only large companies with a net turnover for a branch will be covered, which will increase from €40 million to €50 million and from €150 million to €450 million for companies from a third country.

A more limited impact for companies under the scope of CSDDD

The Corporate Sustainability Due Diligence Directive (CSDDD) entered into force on July 25th 2024, and Member States should have transposed it within two years. To sum up, the Directive requires companies to carry out activities to prevent, mitigate or minimise impacts on human rights and the environment.

The deadline for transposing the Directive is moved forward by one year, from 2026 to 2027, for the first group of companies covered by the Directive.

The scope of the Directive is limited to the operations of companies, their subsidiaries, and direct partners and to their direct effects on individuals and communities. Thus, the rules are excluded from the application of businesses indirectly linked to the parent company or on indirect effects. An exception is made when companies have information that suggests a negative impact at the level of an indirect partner. A company will also have to ensure its code of conduct is followed throughout the business chain.

Companies should also limit the knock-on effect on SMEs and mid-caps by limiting the amount of information required for value chain mapping unless this information can be retrieved by other means. As an effect of the proposed change, Member States must transpose the Directive by July 26th, 2027 (instead of 2026), and companies with more than 5,000 employees and €1.5 billion in turnover will comply from July 2028 (instead of 2027). Companies with more than 3,000 employees and €900 million in turnover will comply from July 2029 and all other companies under the Directive’s scope must comply from July 2030.

The European Commission proposed to drop the obligation to terminate ongoing business relationships with companies that do not respect human rights or harm the environment. The obligation not to enter into new relationships or expand existing ones remains.

The European Commission proposes removing the provisions on civil liability at the European level and collective redress. The provision on effective access to justice, including companies’ right to full compensation in the event of non-compliance with due diligence obligations, is left unchanged. The monitoring of the due diligence will take place every five years instead of every year. The European Commission also suggests to amend the legislation with no minimum threshold for penalties. The Commission and the Member States should issue guidelines to assist supervisors in determining the level of sanctions.

CBAM in the crosshairs

The proposed amendments to the CBAM mechanism aim to spare 90% of concerned companies from reporting requirements while still covering 99% of the C02 emissions. The Commission aims at introducing exemptions for small occasional importations of CBAM goods, below the maximum threshold of 50 tonnes per year: this threshold corresponds to approximately 80 tonnes of CO2 equivalent on average per importer. These importers will no longer be subject to any CBAM obligation.

Electricity and hydrogen are excluded from the exemption. The Commission may adopt delegated acts to change the threshold. The starting date for sales of Cbam certificates is moved to February 2027.

The proposed changes will facilitate compliance with the reporting requirements and aim to simplify and streamline the authorization procedure for national competent authorities and the Commission, the data collection processes from third-country producers to authorized CBAM declarants, and the calculation of embedded emissions for certain goods. Another is the calculation of the authorized CBAM declarants’ financial liability during the year of imports into the EU and the claim by authorized CBAM declarants for carbon prices paid in third countries where goods are produced.

Simplification measures will be coupled with measures making CBAM more effective, by strengthening anti-abuse provisions and developing a joint anti-circumvention strategy together with national authorities.

The Commission is also proposing a series of changes to the InvestEu regulation to mobilize at least another 50 billion in additional public and private investment.

Among the proposed simplifications is an amendment to several delegated acts of the Taxonomy requirements.

Which changes for EU taxonomy requirements

The Commission has reduced the reporting burden of the EU taxonomy and limited it to companies with more than 1,000 employees (corresponding to the scope of the CSRD). The possibility of voluntary reporting for other large companies remains within the future scope of the CSRD. The possibility of reporting on activities partially aligned to the EU taxonomy is introduced.

A 10% de minimis threshold is introduced to allow reporting companies to focus their efforts to assess compliance with the taxonomy (e.g., eligibility and alignment) on activities that represent a significant share of their revenue, capital, or operating expenditures. Non-financial companies will be allowed not to declare alignment of operating expenses if the cumulative turnover of their eligible activities does not exceed 25% of their total turnover.

The proposal envisages an increase in the available EU guarantee of 2.5 billion, which, according to Brussels, should mobilise about 25 billion in public and private investment. The other 25 billion should come from the increased possibilities of combining the resources available under the pre-existing programs with the InvestEu Fund. The EU executive assumes savings of around 200 million from the simplification of reporting, in particular for small and medium-sized enterprises (SMEs).