Key changes to the Omnibus proposal introduced by the European Commission on 26 February 2025

The Omnibus proposal was published on 26 February 2025, following its announcement in 2024. Its purpose is to streamline, harmonise and simplify the European regulatory framework governing the sustainable transition.

The legislation covered by the Omnibus proposal includes the following

• The Corporate Sustainability Reporting Directive, or Directive (EU) 2022/2464 of 14 December 2022 (“CSRD”).
• The EU Taxonomy Regulation, which entered into force on 12 July 2020 and aims to identify economic activities that may be considered environmentally sustainable.
• The Corporate Sustainability Due Diligence Directive (“CSDDD”), adopted by the European Parliament on 24 April 2024 and by the Council on 24 May 2024. In particular, the Directive requires certain companies meeting specific thresholds to exercise due diligence in relation to human rights and environmental matters. These companies must take various measures, including integrating due diligence into their policies and internal management systems.
• The Carbon Border Adjustment Mechanism (“CBAM”), an EU regulatory instrument providing for the application of a carbon price equivalent to that imposed on European industry to certain products imported into the EU from non-EU countries.

The main proposed changes are as follows

• Reduction in the scope of the CSRD. Under the current framework, the Directive is intended to apply to companies with more than 250 employees, turnover exceeding EUR 50 million and a balance sheet total exceeding EUR 25 million. The proposed thresholds would be increased to companies with more than 1,000 employees, turnover exceeding EUR 50 million and a balance sheet total exceeding EUR 25 million. This increase in thresholds would exclude approximately 80% of companies from the scope of the Directive.
• The deadlines for the application of reporting obligations would be postponed. While the initial framework provided for a first wave of companies to become subject to the reporting requirements from 2025 and a second wave from 2026, the new proposal provides for a two-year postponement. In other words, the first wave would be required to comply with the reporting obligations from 2027 and the second from 2028.
• Non-financial performance criteria would be reduced and simplified, with a view to improving clarity.
• The deadline for Member States to transpose the CSDDD, initially scheduled for July 2026 with application from July 2027, would be postponed by one year, with transposition due by July 2027 and application from July 2028.
• The due diligence obligations relating to direct and indirect business partners would be simplified. Due diligence in relation to indirect business partners would no longer be required unless there are indications of adverse impacts.
• Taxonomy reporting, which was originally mandatory for all companies within scope, would become voluntary for companies with turnover below EUR 450 million.
• CBAM reporting obligations, which require importers of carbon-intensive products to report emissions levels, would include an exemption for companies with turnover below EUR 450 million.
• Amendments would also be introduced to facilitate and optimise the use of investment programmes such as InvestEU.

Alongside these proposed amendments, the European Commission also presented the Clean Industrial Deal. Its objective is to “accelerate decarbonisation while securing the future of manufacturing in Europe”. It focuses in particular on energy-intensive industries and clean technologies. The aim is to generate savings of EUR 45 billion in 2025, with this amount expected to increase thereafter.

Perception

• NGOs have criticised the reduction in human rights and environmental requirements. This easing of obligations is perceived as giving greater priority to the competitiveness of European companies over environmental considerations.
• Companies, meanwhile, are concerned that the rules may become more complex despite the European Commission’s stated objective of making them more effective and easier to understand.

➡️ For any questions regarding ESG matters, particularly in the financial sector, please contact our experts Nicolas Thieltgen, Anne-Marie Ka or Aurélie Dardenne.