The European Commission recently unveiled its Omnibus package which is intended to modify certain key EU laws on sustainability reporting. Under the proposed changes, implementation of the Corporate Sustainability Reporting Directive (CSRD) will be delayed by two years and only companies with more than 1,000 employees and either at least €50 million in turnover or a balance sheet of more than €25 million will have to report. That reduces the number of businesses in scope of the directive from about 50,000 to around 10,000, according to some commentators. Mid-sized companies will no longer be required to report but can voluntarily disclose sustainability metrics.
In addition, the package proposes halving the number of data points that companies must collect and dropping sector-specific reporting standards due next year. However, rumours that double materiality assessment and reporting requirements would be dropped have proved unfounded.
Obligations under the Corporate Sustainability Due Diligence Directive have also been watered down quite significantly. The directive seeks to make companies accountable for human rights violations and environmental damage in their supply chains but the changes announced as part of the Omnibus package mean that companies will only need to look at direct suppliers. In addition, the frequency at which companies are expected to monitor suppliers is to be reduced to once every five years instead of annually.
The directive’s implementation has been postponed until July 2028 and guidelines for businesses will be published in July 2026 to give companies more time to prepare.
According to the commission, the proposed changes will save businesses “around €6.3 billion” annually in administrative costs and “mobilise additional public and private investment capacity of €50 billion.”
Does this signal the beginning of a rollback on or dilution of EU commitments to sustainability and climate action? How might that affect the responsible investing market? Will it reduce the pressure to divert capital towards green or sustainable investments?
The Omnibus package is in effect a series of packages, with further announcements to be made over the coming months as a response to the Draghi report on EU competitiveness and other challenges posed by member states on the recent increase in regulatory requirements for companies operating in the EU, says Derarca Dennis, EY Ireland assurance partner and sustainability services lead.
“The aim is to simplify these requirements,” says Dennis. “The package related to sustainability is just the beginning of the simplification process and efforts to create a more competitive EU economy.
“Before the Corporate Sustainability Reporting Directive, reporting was for many a voluntary exercise that typically focused on carbon emissions and DEI targets. So, moving to a broader spectrum of standards represents a significant leap, requiring investment in both technology and resources and, critically, the development of multidisciplinary teams.”
The European Commission has been very clear that it remains committed to the targets previously set by commission president Ursula von der Leyen, and this isn’t a rollback on or dilution of commitments to sustainability and climate action. “The EU is still very committed to addressing climate challenges,” says Dennis.
She believes that sustainable finance remains a critical piece of the jigsaw. “The competitiveness compass announced in January by the commission underlined the need to continue investment in decarbonisation projects and start-up businesses focused on sustainable R&D. I think these changes may enable the investment community to obtain better, more consistent information and drive funds into companies that are having an impact,” she says.
While the Omnibus package has been published, it must still be reviewed and approved by both the European Parliament and European Council, a process that typically takes several months.
“In the short-term, things will remain the same for companies, so they should consider what their ‘no regrets actions’ are to avoid losing momentum in these uncertain times,” says Dennis. “My view is that decarbonisation, water management, waste management, circular innovation and biodiversity are areas that will add value to your business, regardless of regulatory requirements.”
