EU’s “Simplification Omnibus”: Easing Sustainability Reporting for Businesses

The European Commission has recently introduced the "Simplification Omnibus" package, proposing amendments -?that are not yet enforced?- to the?Corporate Sustainability Reporting Directive (CSRD), the?Corporate Sustainability Due Diligence Directive (CSDDD), the?EU Taxonomy, and the?Carbon Border Adjustment Mechanism?(CBAM). What are the main take aways from this package? First of all, the aim is to reduce the complexity and breadth of non-financial reporting for businesses operating in the EU. The plans also aim to remove 80% of companies from the scope of the CSRD and limiting the sustainability information that large companies and banks can request from smaller companies.?In a nutshell the proposed amendments include:

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• Threshold adjustments: The employee threshold for mandatory CSRD compliance is proposed to increase from 250 to 1,000 employees and either revenue greater than €50 million net turnover or a balance sheet above €25 million.????? This change would exempt many small and medium-sized enterprises (SMEs).

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• Reporting scope reduction: The focus of the Corporate Sustainability Due Diligence Directive (CSDDD) is proposed to shift primarily to direct suppliers, with mandatory assessments occurring every five years instead of annually.

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• Implementation timeline extensions: The enforcement of specific CSRD provisions are proposed to be deferred to 2028 for companies in the second and third reporting wave, with the application of the CSDDD potentially postponed to mid-2028. This extension provides companies additional time to align their operations with new requirements.?

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• Introduction of a new threshold: ?The most significant change to CBAM is the introduction of a new threshold that eliminates 90% of importers from the scope of the regulation. Despite removing approximately 182,000 importers, however, the Commission said that more than 99% of emissions will still be covered by CBAM. The new proposals also include simplifications around the calculation of emissions and other reporting requirements.

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Ursula von der Leyen, President of the European Commission, said:

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“Simplification promised, simplification delivered! We are presenting our first proposal for far-reaching simplification. EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy. This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way.”

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Despite the proposed relaxations, persisting with existing compliance preparation is prudent. The CSRD has already been transposed into national law in several countries: these laws remain enforceable until any new amendments are officially adopted and implemented, a process that could extend over a year or more.

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