The EU omnibus initiative

What is the EU omnibus? 

As a response to concerns raised by several stakeholders regarding the complexity of European sustainability legislations, the President of the European Commission Ursula von der Leyen indicated in a speech in November 2024, that the EU Commission was considering consolidating the CSRD, CSDDD and the EU Taxonomy into one omnibus regulation. 

Discussions about reducing the reporting burden on companies was sparked by a report by the former Italian Prime Minister Mario Draghi discussing the Future of European Competitiveness, which pointed to regulatory barriers as a major cause of the EU's economic stagnation. 

In January 2025, Germany and France voiced concerns and called for a simplification and postponing of the CSRD. The first out of three indicated Omnibus proposals from the European Commission to be released this year was published on February 26, 2025.  

While the initial proposal mainly touches on sustainability reporting simplifications, the second and third proposals are expected to deal with investment simplifications and provide definitions and guidance for small mid-cap companies. 

Corporate Sustainability Reporting Directive (CSRD): The CSRD outlines sustainability information that companies are required to report. The purpose is to ensure that investors and other stakeholders have access to the information they need to assess the impact of companies on people and the environment, and for investors to assess financial risks and opportunities arising from climate change and other sustainability issues. 

Corporate Sustainability Due Diligence Directive (CSDDD): The aim of the CSDDD is to foster sustainable and responsible corporate behaviour in companies’ operations and across their global value chains. The new rules will ensure that are identifying and addressing potential and actual adverse human rights and environmental impacts in the company’s own operations, their subsidiaries and, where related to their value chains. 

EU Taxonomy: The EU Taxonomy establishes a classification system for companies to identify which economic activities are considered sustainable. 

Carbon Border Adjustment Mechanism (CBAM): The CBAM puts a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries.  

The initial omnibus proposal, released on 26th of February 2025, brings several changes to existing sustainability directives. Here is a list of main proposed changes and how it can impact your business:  

For CSRD and EU Taxonomy, changes include: 

• Aligning sustainability reporting scope with the CSDDD, removing around 80% of companies from the scope of CSRD. The reporting requirements would only apply to large undertakings with more than 1000 employees (i.e. undertakings that have more than 1000 employees and either a turnover above EUR 50 million or a balance sheet total above EUR 25 million). 
• The CSRD and EU Taxonomy reporting requirements are postponed for two years (until 2028) for companies currently in the scope of CSRD and which are required to report as of 2026 or 2027. 
• Limiting the EU Taxonomy reporting obligations to the largest companies (corresponding to the scope of the CSDDD), while keeping the possibility to report voluntarily for the other large companies within the future scope of the CSRD.  
• Introducing the option of reporting on activities that are partially aligned with the EU Taxonomy, fostering a gradual environmental transition of activities over time. 
• Introducing a financial materiality threshold for the Taxonomy reporting and reduce the reporting templates by around 70%. 
• In the EU Taxonomy, simplifications to the most complex “Do no Significant harm” (DNSH) criteria for pollution prevention and control related to the use and presence of chemicals to all economic sectors. 
• Simplifications of Taxonomy-based KPIs for banks. Banks will be able to exclude from the denominator of the Green Asset Ratio (GAR) exposures that relate to undertakings which are outside the future scope of the CSRD (i.e., companies with less than 1000 employees and €50m turnover). 
• Ensure that sustainability reporting requirements on large companies do not burden smaller companies in their value chains by adoption of a voluntary reporting standard (VSME). 

For CSDDD, the main changes include: 

• Simplify sustainability due diligence requirements so that companies in scope avoid unnecessary complexities and costs, e.g., by focusing systematic due diligence requirements on direct business partners; and by reducing the frequency of periodic assessments and monitoring of their partners from annual to 5 years, with ad hoc assessments where necessary. 
• Reduce burdens and trickle-down effects for SMEs and SMCs by limiting the amount of information that may be requested as part of the value chain mapping by large companies. 
• Further increase the harmonisation of due diligence requirements to ensure a level playing field across the EU. 
• Remove the EU civil liability conditions while preserving victims' right to full compensation for damage caused by non-compliance, and protecting companies against over-compensation, under the civil liability regimes of Member States; and 
• Give companies more time to prepare to comply with the new requirements by postponing the application of the sustainability due diligence requirements for the largest companies by one year (to 26 July 2028), while advancing the adoption of the guidelines by one year (to July 2026). 

For CBAM:  

• Exempt small importers from CBAM obligations, mostly SMEs and individuals, by introducing a new CBAM cumulative annual threshold of 50 tonnes per importer, thus eliminating CBAM obligations for approximately 182,000 or 90% of importers, mostly SMEs, while still covering over 99% emissions in scope. 
• Simplify the rules for companies that remain in CBAM scope: on authorisation of CBAM declarants, as well as the rules related to CBAM obligations, including the calculation of embedded emissions and reporting requirements. 
• Make CBAM more effective in the long term, by strengthening the rules to avoid circumvention and abuse. 
• This simplification precedes a future extension of CBAM to other ETS sectors, downstream goods, followed by new legislative proposal on the scope extension of CBAM in early 2026.

This is a non-exhaustive list, for detailed information we refer to the EU Omnibus press release. For more information also see the EU Commission FAQs. 

Do you want to know what impact the Omnibus has for your business? KPMG can provide tailored solutions to identify and close your gaps, help determine ambition levels and provide guidance for your future sustainability roadmaps.