Ricardo Sustainability, Clean Energy and Environment

How to ride the EU Omnibus

05 Mar 2025

In this article we’ll outline the key changes associated with the newly announced EU Omnibus simplification package and highlight the ‘no regret’ actions that your business should take in the face of these changing regulations to build resilience and long-term viability.

The reduction in reporting heralded by the Omnibus is welcome to many businesses but it is important to remember that the expectation for action alongside meeting commitments and targets remains paramount.

What is the EU Omnibus? | Summary of key changes | No regret actions to take now

What is the EU Omnibus?

The European Commission has proposed a "Sustainability Omnibus" package that significantly simplifies sustainability reporting requirements.

The package is part of the EU Competitiveness Compass, which aims to enhance Europe’s competitiveness through mechanisms including decarbonisation and reindustrialisation, this is also linked with the Clean Industrial Deal. Simplification is cited as one of the enablers to achieve this ambition and contributes to the rationale for the Omnibus.

The Omnibus Simplification Package, released on 26 February, includes proposals to revise the EU Taxonomy regulations, the Corporate Sustainability Reporting Directive, the Corporate Sustainability Due Diligence Directive, and the Carbon Border Adjustment Mechanism.

Summary of key proposed changes under the EU Omnibus

Corporate Sustainability Reporting Directive | Corporate Sustainability Due Diligence Directive | EU Taxonomy | Carbon Border Adjustment Mechanism

Corporate Sustainability Reporting Directive

Reduced scope: Only companies with more than 1,000 employees (and either €50 million turnover or €25 million balance sheet) will be required to report. This reduces the number of companies in scope by approximately 80%.
Simplified reporting standards: The remaining 20% will face a reduced reporting burden with 70% fewer data points in the European Sustainability Reporting Standards (ESRS). The Commission will revise the ESRS to substantially reduce data points, clarify provisions, and improve consistency with other legislation. Focus will be on quantitative data points versus narrative data points.
Voluntary reporting for mid-sized and smaller companies: The Commission will adopt by delegated act a voluntary reporting standard, for companies that fall out of scope of the CSRD, based on the standard for SMEs (VSME) developed by EFRAG.
Postponed implementation: Reporting requirements for companies that haven't yet started implementing CSRD (wave 2 and 3 companies) will be postponed by two years.
Protection for mid-sized and smaller companies: A "value chain cap" will prevent larger companies from requesting excessive sustainability information from smaller partners. Companies with fewer than 1,000 employees will be shielded from excessive information requests.
Sector-specific standards discontinued: No tailored reporting rules for industries so likely to fall back on voluntary industry and sector initiatives.
Limited assurance of data: The proposal removes the Commission's ability to propose a shift from a limited assurance to a reasonable assurance, with guidance on limited assurance expected in 2026.

The majority of EU member states have fully transposed the current CSRD into domestic law, with the exception of a few, notably Germany. The current version of the CSRD will continue to apply to entities based in those member states until the omnibus proposal is finalised, and amendments are transposed. The process could take several years to complete, which is why the European Commission has requested a “stop the clock” for two years and urged co-legislators to treat the proposals with priority.

Therefore, if you are in scope of the locally transposed CSRD for financial years beginning on or after January 2024 you should continue with your disclosure preparations. The proposals to delay the reporting requirements by 2 years are expected to be fast tracked and transposed by December 2025, therefore in time to be effective for the 2025 reporting period but the timelines are still uncertain at this stage.

Newly proposed CSRD scoping thresholds for large companies and non- EU parent companies

Non-EU ‘third country’ parent companies

EU “large companies” / groups

Current thresholds

Ultimate non-parent companies that both:

Generate in the EU, at the group level, a net turnover of at least €150 million
i) Have at least one large EU subsidiary covered by the CSRD (meeting at least two of the three thresholds) or
ii) a branch in the EU that generated a net turnover of €40 million.

EU entities exceeding at least two of the following three thresholds:

Balance sheet total: €25 million
Global net turnover: €50 million
Number of employees: 250

Proposed revised thresholds

Ultimate parent companies that both:
Generate, in the EU, at the group level, a net turnover of at least 450 million euros
i) Have at least one large EU subsidiary (as defined by the revised “large company” threshold i.e. 1000 employees) or
ii) a branch in the EU that generated a net turnover of €50 million.

EU entities with 1,000 employees and exceeding one of the following two thresholds:

Balance sheet total: €25 million euros
or
Worldwide net turnover: €50 million euros

Corporate Sustainability Due Diligence Directive

Simplified scope: Primary due diligence of risk assessments to focus on Tier 1 suppliers only. Due diligence beyond direct partners only when plausible risk of adverse impacts exists.
Monitoring frequency: To reduce complexity and costs, the proposal is to extend periodic assessment intervals from 1 to 5 years, requiring updates only when measures are no longer adequate.
Climate transition plans remain a key component for reporting: aligning the requirements on the adoption and reporting of transition plans for climate mitigation, where available, with the CSRD.
Limited enforcement and liability: Removed the EU's harmonized civil liability rules and let national laws govern liability.
Postponement implemented: Transposition expected in 2027 and application delayed until 2028 for large companies.

EU Taxonomy

There are no changes proposed to the Taxonomy Regulation itself. However, the changes to the scope of CSRD reporting will have a knock-on impact on the scope of Taxonomy reporting.
Voluntary reporting for large companies (>1,000 employees) with net turnover up to €450 million, reducing the number of companies obliged to report Taxonomy alignment.
Introduction of partial Taxonomy-alignment reporting for companies that meet only certain EU Taxonomy requirements but want to demonstrate progress.
Mandate for the Commission to develop delegated acts for standardising content and presentation of reporting.
Simplification of reporting templates, reducing data points by almost 70%.
Exemption from assessment for economic activities that aren't financially material (not exceeding 10% of turnover, capital expenditure, or total assets).
Changes to key performance indicators for financial institutions, particularly the green asset ratio (GAR) for banks.
Proposal requiring feedback of two alternative options to simplify "Do No Significant Harm" criteria for pollution prevention and control related to chemicals.

Carbon Border Adjustment Mechanism (CBAM)

Simplification of processes for businesses and reduction of red tape.
Exemptions apply for smaller importers (mostly SMEs and individuals) who import small quantities of CBAM goods.
Threshold introduction for occasional importations below 50 tonnes per year (approximately 80 tonnes of CO2 equivalent), removing all CBAM obligations for these imports.
Easier compliance for importers remaining in CBAM scope, including simplified: declarant authorisation, emissions calculation, reporting requirements and financial liability compliance.
The Commission is also examining potential support measures for exporters of CBAM products at risk of carbon leakage (e.g. intermediate and final products).

So, what path should businesses take to balance the needs of future compliance with sustainability progress? We’ve compiled some no regret actions that will prepare you for a future world whether you are still in, or newly out of, scope of the regulations.

No regret actions to take now

Swap reporting for action and impact

If your organisation now has delayed or reduced reporting obligations, take the time to re-focus your budget from reporting to planning and implementing sustainability projects to drive progress to your climate goals and impact.

Develop or strengthen your climate transition plan

This is still part of the CSDDD and IFRS S2 obligations and is your key strategic tool for enabling and demonstrating how you will evolve your business to survive and thrive in a low carbon economy. As a no-regrets strategy, your climate transition plan should:

Align with emerging global standards and frameworks, including IFRS Sustainability Standards (particularly S2) and the Transition Plan Taskforce requirements.
Consider the evolving expectations of customers who increasingly demand climate-aligned products and services.
Address investor requirements for clear, comparable, and decision-useful climate transition information that demonstrates both risk management and opportunity capture.
Ensure compatibility with regional variations in standards while maintaining core alignment with international frameworks.
Adopt a forward-looking approach that incorporates scenario analysis and concrete emissions reduction targets.
Include specific implementation timelines and capital allocation plans that demonstrate commitment beyond mere disclosure.
Establish governance mechanisms that embed climate considerations into strategic decision-making processes.

Find out more about climate transition plans

Adapt to changing regulatory requirements beyond the Omnibus

Understand how you can pivot and adapt your current strategies to accommodate future regulatory change. Whilst the Omnibus Package reduces reporting and regulatory requirements on some companies, the European Commission is promoting a series of new initiatives by launching sectoral industrial strategies (covering energy intensive industries, cleantech, chemicals, automotive, industry, circular economy) and reviewing existing legislation.

For example, sector specific rules for the sustainability of products, from textiles to furniture to plastics, are being developed by the JRC under the Ecodesign for Sustainable Products Regulation (ESPR). These will come into force over 2026-27, at the same time as other rules will force companies in specific supply chains to disclose their environmental credentials – e.g. the Batteries Regulation is introducing a carbon footprinting declaration requirement in 2025.

Find out more about the Sustainable Battery Regulation

Build on your Double Materiality Assessment insights

A double materiality assessment (DMA) gives you deep strategic knowledge on both the key risks and opportunities for your business from the changing climate and by identifying where your business is having the greatest impact on the climate.

You’ll need to report this under the CSRD if you are in scope but it’s also essential knowledge for all companies to inform your strategy for sustainability and long-term viability. Continuing with your DMA will put you in a good position for different reporting purposes since the European Financial Reporting Authority Group (EFRAG) standards were designed with interoperability in mind, so the financial materiality aligns with the International Sustainability Standards Board (ISSB) and impact materiality aligns with the Global Reporting Index (GRI). Both are global recognised standards which will position you well for future reporting and sustainability strategy work.

Find out more about double materiality assessments

Your business needs climate scenario analysis now more than ever

Reporting requirements aside, businesses that want to thrive in an era of climate uncertainty need to map their assets and assess the vulnerability of those assets to climate change alongside assessing the economic, technological, reputational and market risks that transition brings.

A climate scenario analysis provides a structured framework to evaluate how various plausible climate futures could affect your business operations, supply chains, and market positioning. From examining multiple pathways from orderly transitions to disruptive physical impacts, to evaluating how resilient your organisation would be and what you can do to enhance resilience by mitigating risks and taking advantage of any opportunities.

With the convergence of global reporting frameworks including TCFD, ESRS E1, and IFRS S2, if you haven't already started your climate scenario analysis journey, the regulatory landscape is giving you a compelling reason to begin now. The convergence of TCFD recommendations, ESRS E1 requirements, and the latest IFRS S2 standard means robust scenario analysis isn't just nice-to-have – it's becoming mandatory across many jurisdictions.

Find out more about climate scenario analysis

Find out more about climate adaptation and resilience

Build capacity

Strengthen sustainability and regulatory knowledge in your teams through training and upskilling. Consider onboarding an external sustainability partner who can work with your staff to support them, providing expertise and efficient use of time whenever necessary. At Ricardo we work with many clients in this ongoing way delivering bespoke training and support as required.

Further information and support

Ricardo’s experts can work with you to build resilience to future regulatory updates and the changing climate. We can support you to develop flexible and forward-facing strategies and programmes of work that will help you to confidently accelerate your sustainability journey through the evolving landscape.