**Brussels**: On 26 February 2025, the European Commission proposed the Omnibus Simplification Package to ease compliance with sustainability regulations, delaying key reporting deadlines and narrowing obligations. The move aims to balance environmental goals with reduced administrative burdens amid mixed reactions within the EU Parliament and scrutiny from international stakeholders.
On 26 February 2025, the European Commission released the Omnibus Simplification Package, a collection of proposals intended to streamline critical EU sustainability regulations. This initiative aims to reduce administrative burdens and compliance costs for businesses while maintaining the EU’s environmental ambitions.
Central to the proposals are adjustments to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). If the proposals are enacted in their current form, various businesses will face a less stringent timeline for compliance with these sustainability reporting and due diligence requirements. Specifically, the Commission suggests delaying the application of CSRD reporting requirements for companies that have not yet begun implementing the CSRD by two years. This includes large companies and listed small and medium-sized enterprises (SMEs). The implementation of the new CSDDD framework would also be postponed by one year, shifting the deadline to 26 July 2027, with the initial phase of due diligence requirements applicable to larger companies extended to 26 July 2028.
Furthermore, the Omnibus Simplification Package proposes a reevaluation of the scope of both the CSRD and the CSDDD. Under the revised proposal, the reporting obligations of the CSRD would apply only to large undertakings with more than 1,000 employees, aiming to limit the number of companies subject to these requirements significantly. The due diligence obligations under the CSDDD would similarly be narrowed, focusing primarily on direct contractual partners.
Supporters of the Omnibus Simplification Package, which is still at the proposal stage, welcome the anticipated reduction in regulatory pressures. However, critics raise concerns about potential impacts on corporate accountability and transparency. Discussions surrounding the proposed changes are expected to prompt a vigorous debate within the EU Parliament and Council, as well as attention from global stakeholders, including those in the United States.
The Omnibus Simplification Package includes several key elements for amending current regulations. The first directive aims to postpone the application of reporting requirements and transposition deadlines for both directives, while the second directive seeks to amend the content and obligations within these frameworks. Additionally, draft legislation is set to amend the Taxonomy Disclosures and revise the Carbon Border Adjustment Mechanism Regulation.
Among the most notable changes proposed under the CSRD is a two-year delay in the implementation dates for the second and third waves of companies, allowing further discussions among EU lawmakers regarding substantive changes outlined in subsequent proposals. The initiative aims to provide companies with a clear legal timeframe, reducing the likelihood of requiring them to report their activities for the 2025 and 2026 fiscal years, only to then find these obligations altered.
The proposed amendments to the CSDDD suggest an extension of the compliance deadline for larger firms and a limitation on the scope of due diligence obligations, focusing mainly on direct business partners and no longer requiring assessments of indirect partners unless credible information suggests potential concerns.
Sector-specific standards are also on the chopping block, as the proposal seeks to eliminate the empowerment of the Commission to adopt additional prescriptive standards. This would ostensibly reduce the reporting obligations for companies, potentially easing the compliance pathway.
While the package’s proposals generally aim to simplify compliance and reduce costs for businesses, they have provoked polarising opinions in the EU Parliament. The centre-right European People’s Party has shown support for the simplification efforts, advocating for reduced regulatory burdens, while members of the Socialist and Democratic group express apprehension about potential rollbacks in sustainability regulations. Lara Wolters, rapporteur for the CSDDD, remarked that the group “cannot accept the watering down of sustainability, labour and human rights standards in the CSDDD and CSRD.”
Internationally, the proposals have garnered scrutiny, particularly from U.S. entities concerned about extraterritorial implications of the CSDDD. Concerns have been raised about alignment with U.S. corporate governance and the directive’s broader impact on American businesses.
The Commission will now navigate a complex, lengthy legislative process, which includes negotiations and amendments across various EU institutions. With the evolving political landscape, Member States are grappling with how best to foster competitiveness and support economic growth while continuing to uphold sustainability objectives.
Source: Noah Wire Services
Subscribe to Industry Updates
