The first Sustainability Omnibus Package published on 26 February 2025, is composed of a Directive that amends provisions of the Corporate Sustainability Reporting Directive (EU) 2022/2464 (CSRD), the Corporate Sustainability Due Diligence Directive (EU) 2024/1760 (CSDDD), the pollution prevention and control criteria of the EU Taxonomy, the green asset ratio (GAR), and the Taxonomy Disclosures Regulation templates. It furthermore includes a Regulation to simplify and strengthen the carbon border adjustment mechanism (CBAM). The proposed amendments represent the first phase of the overall work programme for 2025 proposed to comprise a simplification of sustainable finance reporting and sustainability due diligence of the sustainable finance disclosure rules.

The 2018 Sustainable Finance Action Plan, which framed the ambition for the sustainable finance agenda and the legislation targeted by the Sustainability Omnibus proposal, called for a more sustainable path for our planet and our economy. It stated:
“Sustainability and the transition to a low-carbon, more resource-efficient and circular economy are key in ensuring long-term competitiveness of the EU economy”.
The 2018 Action Plan spoke of fostering long-termism as a necessary part of sustainable growth and ensuring the stability of the financial system. It called for investment decisions that considered risks likely to materialize over a longer time horizon. Long-termism, or the practice of making decisions that have long-term objectives or consequences was centre-stage, as it was stated:
“Sustainability and long-termism go hand in hand”.
In this context, the central focus of the sustainability agenda is to reduce the undue pressure for short-term performance in financial and economic decision-making, notably by increased transparency, so that investors, whether corporate or retail, can take better informed and more responsible investment decisions. The sustainable finance agenda is therefore long on long-termism and short on short-termism.

What is the status of the current sustainability disclosure laws?
Aligned with the blueprint of the 2018 Action Plan, the CSRD and CSDDD published in 2024 and 2022 respectively, represent a consolidation and enhancement of existing best practices that have been developed by recognised international voluntary frameworks on responsible business conduct. These laws intend to create a level playing field by preventing fragmentation of the single market and avoiding Member States creating their own rules on transparency of sustainability-related impacts, risks and opportunities.

The CSRD and CSDDD and other related sustainability laws enacted by the EU since the 2018 Action Plan have been subject to extensive trilogue discussion, fair procedure, impact assessment and stakeholder engagement. Given their recent publication, many of the Directives’ provisions are not yet in-force in the market. The CSDDD has not yet even been transposed let alone applied by companies. The CSRD has been applied by the first set of companies which are only beginning to publish their first sustainability statements in the first half of 2025. Only the first wave of non-financial entities required to report under the EU Taxonomy have published their reports comprising 2,180 firms at the end October 2024.

Why are the Sustainability Omnibus revisions needed?

The Sustainability Omnibus proposal is driven by demand for a simpler and faster Europe as laid out in the EU’s Competitiveness Report (2024) concerning the Unions development. The rationale offered by the Commission for the Sustainability Omnibus proposal is that “the CSRD and the CSDDD are now being implemented in a new and difficult context. Russia’s war of aggression against Ukraine has driven up energy prices for EU undertakings. Trade tensions are rising as the geopolitical landscape continues to shift…”. It states that the differing approaches taken by jurisdictions regarding sustainability reporting and due diligence ‘raises questions about the effects of these laws on the competitive positioning of EU companies..’.

How does this rationale fit with the Union’s long-held key principles and policy on development? The Treaty on the Functioning of the European Union (TFEU) applies to undertakings, member states and EU institutions. The TFEU provisions resolve to combat social exclusion and discrimination, promote solidarity between generations, promote economic and social cohesion, and provide a high level of protection and improvement of the quality of the environment. Furthermore, in the Union’s relations with the wider world, the TFEU resolves to contribute to the sustainable development of the earth, and protect human rights, in particular the rights of the child.

ELS Europe’s observations on the proposed Sustainability Omnibus

ELS Europe has carried out a preliminary review of the Sustainability Omnibus proposal. Our preliminary analysis findings across many topics are summarised in Tables 1 and 2 below.

In our view examples of reasonable and effective proposed revisions include the:

• simplification of GAR,
• clarification of the DNSH pollution prevention and control criteria,
• streamlining of the taxonomy disclosure reporting templates,
• prioritisation and reduction in number of reporting data points in the ESRS,
• removal of EU-wide civil liability which is left to national law, while victims of adverse impacts continue to have effective access to justice.

We are now seven years on in the sustainable finance agenda. In this time, an identified threat to the sustainability agenda is a lack of good quality, consistent data. Reducing the numbers of large companies required to report, in our view risks exacerbating this data problem and thereby delaying the transparency needed for decision-making by all market actors, including investors and consumers. Clear and reliable data is needed for clear and reliable decision making necessary to shift capital flows into environmentally and socially sustainable economic activities. Moreover, the proposal to significantly reduce the number of large companies required to report via the CSRD, ESRS and EU Taxonomy means that the ‘trickle-down’ effect towards medium and small companies will likely vanish.  Some of the provisions of the Sustainability Omnibus in our view may be subject to more in-depth economic and scientific evidence-based impact assessment. In summary, our chief concerns are related to:

• the absence of an impact assessment based on economic and scientific evidence on the strengths, weaknesses, benefits and burden of the CSRD, CSDDD provisions, and therefore a lack of evidence supporting the proposed reduction (by 80%) of the number of companies in-scope,
• the significant reduction in the number of companies required to disclose on the EU Taxonomy,
• the postponement of the provisions of the CSRD and CSDDD and impact on the EU’s climate targets and the ‘Fit-for-55’ goals,
• the impact on related laws including but not limited to the Conflict Minerals Regulation, the Deforestation Regulation,
• the removal of the sector-specific ESRS standards, which if done correctly would serve to provide more clarity to data preparers and users alike,
• the removal of the requirement for the Commission to submit a report to the Parliament and Council on additional due diligence requirements for the financial sector (originally to be completed by 26 July 2026), and
• the steep reduction in due diligence monitoring frequency by companies in scope for the CSDDD from 1 year to 5 year cycles.

Opinions expressed are those of the author, Dawn Slevin, Managing Director ELS Europe. This information does not constitute legal, regulatory, technical or other advice.

Table 1: CSRD Original versus Sustainability Omnibus, key topics 

Topics	Original CSRD (EU) 2022/2464	Omnibus COM(2025)80 and COM(2025)81
Date of transposition	6 July 2024	Postpone by 2 years entry into application of the reporting requirements for large undertakings that are not PIEs.
Entry into application	1 January 2025 for public-interest entities (PIE’s) for FY 2024. 1 January 2025 for large companies and large issuers. 1 January 2026 for listed SME’s, small institutions and EU captive (re)insurance undertakings.	No change, to PIE reporting dates. 2-year postponement to: 1 January 2027 for large companies and large issuers. 1 January 2028 for listed SME’s, small institutions and EU captive (re)insurance undertakings.
Scope/size of companies that CSRD applies to	Public interest entities (PIE’s) with more than 500 employees during the financial year (FY). Large undertakings >500 employees during the FY. SME’s, small and non-complex institutions, and captive (re)insurance undertakings.	More closely aligned with scope and thresholds of CSDDD. For PIE’s no change proposed. For large undertakings increase to >1,000 employees and EUR 50 million turnover, or a balance sheet total above EUR 25 million but that are not PIE’s. Parent undertakings of a large group with more than 500 employees on average on its balance sheet dates, on a consolidated basis, during the financial year, but that are not PIE’s.
EU Taxonomy Reporting Obligations	Large undertakings defined as public interest entities with >500 employees, or  more specifically any undertaking which is subject to an obligation to publish non-financial information pursuant to Article 19a or Article 29a of Directive 2013/34/EU (the Accounting Directive).	EU Taxonomy “opt-in” for large undertakings with >1,000 employees and either a turnover >EUR50 million or a balance sheet >EUR25 million. Opt-in for companies with a net turnover < EUR 450 million  and no Taxonomy qualification claims.
	Partial alignment is not built into the Taxonomy Regulation and is applied for estimates and voluntary reporting only.	Reporting on EU Taxonomy partial alignment is acceptable (aim is to put stronger emphasis on transition finance).
	No provision.	Disclosure of alignment for companies with less than 10% eligible activities not mandatory.
	Green Asset Ratio (GAR) to be calculated and used by banks	Simplify the GAR.
	OpEx reporting s required, along with revenue and CapEx.	Reduce scope of mandatory reporting on OpEx.
	‘Do no significant harm’ (DNSH) is a key principle with technical screening criteria.	Simplify certain pollution prevention and control DNSH criteria.
European Sustainability Reporting Standards (ESRS)	1,000 data points approximately.	1. Reduce number of mandatory datapoints by (a) removing those deemed least important for general purpose sustainability reporting, (b) prioritising quantitative datapoints over qualitative/narrative text and (c) further distinguishing between mandatory and voluntary datapoints. 2. Clarify provisions that are deemed unclear improve consistency with other pieces of EU legislation. 3. Provide clearer instructions on how to apply the double materiality principle, to ensure that undertakings only report material information. 4. Simplify the standards’ structure and presentation. 5. Enhance further interoperability with global sustainability reporting standards. 6. Make any other modifications considering the experience from the first ESRS reports.
	Sector-specific standards under preparation.	Removal of the sector-specific standards from the Commissions powers.
Assurance	Limited Assurance with move to Reasonable Assurance.	The possibility of moving from a requirement for limited assurance to a requirement for reasonable assurance would be removed.
	The provisions on assurance and on reporting value chain information to include the opinion of a statutory auditor or if Member States allow an independent assurance service provider.	No change proposed.
	Adoption of standards for assurance is required by 2026.	Instead, the Commission would issue targeted assurance guidelines by 2026.

 

Table 2: CSDDD Original versus Sustainability Omnibus, key topics 

Topics	Original CSDDD (EU) 2024/1760	Omnibus COM(2025)80 and COM(2025)81
Date of transposition	Member states to transpose by 26 July 2026	One year postponement to 26 July 2027
Entry into application	26 July 2027 for companies with >5,000 employees and net annual worldwide turnover of >EUR1.5 billion 26 July 2028, for EU companies with more than 3000 employees and net turnover >EUR 900 million 26 July 2029, all other companies falling under the general scope (see below).	One year postponement to: 26 July 2028 for companies with >5,000 employees and net annual worldwide turnover of >EUR1.5 billion 26 July 2029, for EU companies with more than 3000 employees and net turnover >EUR 900 million 26 July 2030, all other companies falling under the general scope (see below).
Scope/size of companies that CSDDD applies to	>1000 employees and a net worldwide turnover of more than EUR 450 million (for EU companies) or generated more than EUR 450 million turnover in the EU (for non-EU companies.	No change proposed.
Total No. companies estimated in-scope	6000 large EU companies and 900 non-EU companies	No change proposed.
International impact (outside EU borders)	Large EU companies must address their harmful impacts in third countries	No change proposed.
Provisions to reduce burden	Risk-based approach, Allows prioritisation, Cost sharing, Commission helpdesk, and Coordination by EU supervisory authorities.	No change proposed.
Special provisions for SME’s	Several safeguards for SMEs. For instance, large companies must adapt their purchasing practices, avoid unfair contract clauses and cover the cost of third-party verification for SME business partners. They also need to provide proportionate support and invest in their value chain to help SMEs comply with the requirements.	No change proposed.
Direct and Indirect Business partner assessment	Risk-based approach to assess all direct and indirect business partners in the upstream part of the value chain and, to some extent, also in the downstream part.	Risk-based approach to assess all direct business partners. For indirect business relationships where they have plausible information (i.e. of an objective character) that suggests an adverse impact at the level of an indirect business partner, e.g. a complaint or credible media or NGO reports.
Duty to terminate business relationships	Present in cases of actual and potential adverse impacts.	Duty to terminate business relationships is removed. As a last resort the company should suspend the business relationship while continuing to work with the supplier towards a solution.
Stakeholder engagement	Stakeholder is defined to include company’s employees, and of its subsidiaries, trade unions and workers’ representatives, consumers and other individuals, groupings, communities or entities whose rights or interests are or could be affected by the products, services and operations of the company, its subsidiaries and its business partners, including the employees of the company’s business partners and their trade unions and workers’ representatives, national human rights and environmental institutions, civil society organisations whose purposes include the protection of the environment, and the legitimate representatives of those individuals, groupings, communities or entities.	Reduced stakeholders to workers and individuals and communities whose rights are or could be directly affected by the products, services and operations of the company and its business partners.
Monitor	Company to set up a notification mechanism and a complaints procedure.	No change proposed.
Monitoring of due diligence frequency	1 year	5 years
Remedy	A duty to identify adverse impacts. Where a company has caused or jointly caused an actual adverse impact, the CSDDD requires remediation.	No change proposed.
Transition Plan	Company is required to adopt and put into effect, on a best effort basis, a transition plan for climate change mitigation, and update annually.	Obligation for a transition plan adoption is removed and aligned with CSRD requirements.
Communication	Company to communicate to the public about its due diligence policies and efforts annually.	No change proposed.
Assurance	Contractual assurance from a business partner. Commission to issue guidance on assessing fitness of third party verifiers.	No change proposed.
Penalty/Fine	No cap or ceiling. Member States may set a cap of ‘not less than 5% of net worldwide turnover’.	Deletes the requirement for the fine to be commensurate with the company’s net worldwide turnover. Guidelines on penalties to be prepared by Commission and Members States.
Liability	EU-wide civil liability regime applies. Victims of adverse impacts have effective access to justice and a guarantee to their right to an effective remedy.	Removal of EU-wide civil liability which is left to national law. Victims of adverse impacts continue to have effective access to justice and a guarantee to their right to an effective remedy.
Access to justice of stakeholders	The right to full compensation in case a company is held liable for a failure to comply with the due diligence requirements and such failure caused damage.	No change proposed.
Financial sector proposal	Requirement for the Commission to submit a report to the Parliament and Council by 26 July 2026 on additional due diligence requirements for the financial sector.	This requirement is removed, therefore the inclusion of financial services in the scope of the due diligence directive is removed.
Other laws complemented by CSDDD	CSRD, Conflict Minerals Regulation, Deforestation Regulation, and The ‘Fit for 55 Package’ and 2030 targets.	No change proposed.