EU Omnibus regulatory package: What you need to know

The European Commission (“EC”) has published its proposals for directives amending the EU Corporate Sustainability Reporting Directive (“CSRD”) and the Corporate Sustainability Due Diligence Directive (“CS3D”), as well as a draft delegated act amending the current delegated acts under the Taxonomy Regulation (“Taxonomy”) (the “Proposal”). The EC also published a Q&A summarising the key parts of the Proposal, as well as its proposed changes to the Carbon Border Adjustment Mechanism and the InvestEU Regulation.

While it was anticipated that the EC would make sweeping amendments as part of its simplification drive, the scope of change proposed is unprecedented and the potential impacts should not be underestimated.

The EC intends to make significant amendments to the scope, requirements and timing of the CSRD, CS3D and Taxonomy. If adopted in its current form, the amendments would remove around 80% of companies from the scope of the CSRD and reduce the Taxonomy reporting data points by around 70%. In addition, it would delay the CSRD and CS3D compliance deadlines for many participants by two years.

Given the potential impact of these changes, understanding the implications for your business is crucial. The table below breaks down the key changes.

The Proposal

The Proposal includes the following proposed changes to the CSRD, CS3D and Taxonomy:

However, it is important to note that the Proposal does not contemplate any changes to the principle of double materiality under the CSRD.

What next?

The Proposal will be submitted to the European Parliament and the Council of the EU for their consideration and adoption.

The changes to the CSRD and CS3D will enter into force once the co-legislators have reached an agreement on the Proposal and after publication in the EU Official Journal. The draft delegated act amending the current delegated acts under the Taxonomy will be adopted after public feedback and will apply at the end of the scrutiny period by the European Parliament and the Council of the EU.

Keep in mind

The extent to which the so-called Omnibus Regulation would overhaul core EU ESG and sustainability legislation on reporting and disclosures, and supply chain due diligence, has been much anticipated and highly controversial (you can read more about the background here and here). Because of the vastly reduced number of companies that will be required to participate if the Proposal is enacted in its current form, many companies and groups will find themselves out of scope of one or more of the CSRD, CS3D and Taxonomy. Many of those in-scope will be relieved by the reduced compliance burden in terms of reporting and due diligence requirements, and by the additional time to comply. Others may be aggrieved that they may have spent significant time and cost on preparing, perhaps unnecessarily.

However, this is not yet law and it may be subject to change. A major complicating factor is also that many EU Member States have already implemented laws which are in force and, subject to any national legal or regulatory positions, may still need to be complied with. These developments may therefore leave many companies in an unsatisfactory and uncertain limbo.

This article was originally published by CMS Law-Now on 27th February 2025 - Omnibus published: European Commission proposes significant amendments

Authors: Laura Houët, Sinéad Oryszczuk, Olivia Jamison, Stephanie Lodola, Oliver Williams