First 100 Days of the European Commission Sustainability Reporting Omnibus Legislation: Key Insights and Predictions

The Second von der Leyen Commission is shifting its focus from the “Green Deal” to the “Clean Industrial Deal.” The European Commission’s focus for the next five years is to revive the EU’s industrial competitiveness amid increasing geopolitical tensions while maintaining its path to decarbonization.   

The Commission is undertaking a significant simplification of EU legislation in all sectors including its corporate sustainability reporting and due diligence laws. The aim is to reduce unnecessary regulatory and administrative burdens for businesses under their scope.  

The Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy raised the EU’s ambitions in transforming corporate behaviour through greater transparency and accountability for their impact on people, society and the environment and aimed to channel greater funding into the green transition. 

In this context, this article will explore the EU’s new policy commitment to simplify the CSRD, CSDDD and Taxonomy notably through the First Omnibus Package on Sustainability Reporting.  

This Omnibus Package comes amid strong criticism from industry and certain European governments against the requirements of these laws, perceived to be too onerous and as stifling innovation. In the meantime, this package has also generated staunch criticism from center-left European political parties, civil society and NGOs, who see this as a step further towards deregulation and watering down Green Deal laws, as well as eroding trust in the EU legal process and legal certainty for businesses.  

The EU’s Simplification Agenda  

Since taking office on 1 December 2024, the European Commission has prioritized the simplification, reduction and streamlining of its Green Deal policies. This includes a first Omnibus Package to simplify and streamline the CSRD, the CSDDD, the EU Taxonomy and the Carbon Border Adjustment Mechanism (CBAM).  

This first Omnibus on sustainability reporting and due diligence is accompanied by a second Omnibus on investment simplification, and a third Omnibus on reducing paper requirements and creating a new mid-cap category (due in Q2-2025). The former aims to simplify the EU’s investment mechanisms while the latter seeks to create a new definition of small mid-caps benefitting from tailored regulatory simplification like SMEs.  

This sweeping simplification effort indicates the European Commission’s commitment to balancing the promotion of sustainable business practices with the need to foster a competitive economic environment.  

The steady growth of industry pushback against the three laws, in conjunction with criticism from center and center-right European parties set the stage for the First Omnibus Package. Over the past year, businesses had voiced concerns over these laws’ compliance costs, complexity and administrative burdens. Foreign companies have expressed concern about the extraterritorial impact of the CSRD and the CSDDD, with some American stakeholders citing these laws as severely impacting their competitiveness.  

Some companies, particularly SMEs, argued that reporting under CSRD and the requirements of the CSDDD were too demanding. Others have called on the Commission not to revise the existing rules, which they argue could undermine legal certainty.   

The First Omnibus Package on Sustainability  

On 26 February, the Commission presented its first Omnibus package simplify the CSRD, the (CSDDD), the EU Taxonomy and the CBAM. This new package of proposals aims to simplify the EU’s due diligence and corporate responsibility reporting requirements to boost the bloc’s competitiveness and unlock additional investment capacity.   

Key changes include a scope of reduction of companies under the scope of the CSRD, the delayed application timelines of the CSDDD and the CSRD, and the simplification of reporting templates under the EU Taxonomy. Other changes include the simplification of the European Sustainability Reporting Standards (ESRS) and the deletion of sector specific ESRS under the CSRD, and the simplification of certain aspects of due diligence requirements under the CSDDD. Changes to CBAM include an exemption for small importers a new annual de minimis thresholds set at 50 tonnes, a delayed implementation to 2027 instead of 2026, and simplified reporting requirements.  

There has been a mixture of reactions to the proposals of the Commission, ranging from praise by certain industry groups to concerns that these are insufficient. Civil society groups have criticized the package, arguing that it is a step back in corporate accountability and environmental protection. Some political parties have expressed concerns that the proposed changes significantly weaken the EU Green Deal laws while others have welcomed them.  

Looking Ahead  

Looking ahead, EU Green Deal legislation is likely to evolve towards greater flexibility and simplification. There is likely to be a continued focus on enhancing transparency and accountability through the CSRD and the CSDDD, alongside a push for more user-friendly rules.  

In this context, it will be important for businesses to remain agile and adaptable to evolving political and legal landscapes through adaptation and risk mitigation strategies. Now that the proposal for the First Omnibus Package on sustainability reporting is out, it will now require approval from the European Parliament and EU Member States, which may be challenging because of between political parties on the issue. 

Despite this wave of regulatory simplification, the EU remains steadfast in its commitment to climate neutrality and its sustainability objectives. These laws may be simplified but they will not disappear. The EU’s commitment suggests that despite external challenges, it will continue to pursue its sustainability goals albeit with a greater focus on economic and business.