EU-Omnibus – What Should Companies Do Now?

On February 26, 2025, the European Commission introduced the “Omnibus” package, proposing simplifications to regulations associated with the CSRD, CSDDD, and EU Taxonomy. The objective is to reduce administrative burdens by 25%, and for SMEs specifically by 35%.

These proposals still require approval from both the European Parliament and the European Council. Key proposals from the Omnibus package include:

CSRD/ESRS

• Amendments aim to exempt approximately 80% of companies initially covered by the CSRD from associated obligations.
• Plan: CSRD obligations will only apply to companies exceeding 1,000 employees and EUR 50 million in annual revenues.
• Companies from Waves 2 and 3 will receive a two-year postponement of reporting obligations (until 2028).
• EU Taxonomy reporting obligations will only apply to the largest companies with more than 1,000 employees and revenues exceeding EUR 450 million.

Due Diligence (CSDDD)

• Applicable to companies with more than 1,000 employees and EUR 50 million annual revenues.
• Requirements for supply chain monitoring and measurement will be significantly reduced, focusing solely on direct business partners.
• Implementation date shifted to July 2028.

This article provides actionable recommendations tailored to companies based on their current situations, particularly those already preparing for ESRS implementation. The focus is primarily on Wave 2 and Wave 4 companies. Wave 1 companies (already subject to NFRD) must immediately implement ESRS without delay. Also, not relevant to this article are Wave 3 companies, meaning listed small and medium-sized enterprises, whose number in Europe is relatively limited.

Primary focus – Wave 2 and Wave 4 Companies

Wave 2 companies (medium-sized companies originally required to report in 2026 on 2025 data) and Wave 4 companies (with parent companies outside the EU).

Critical questions companies should address:

Do the proposed thresholds for CSRD (more than 1,000 employees and EUR 50 million annual revenue) apply to our company? How close are we to these thresholds?

The thresholds proposed by the European Commission in the Omnibus package precisely match the 2024 demands of the German and French governments. Nevertheless, these thresholds are likely part of ongoing negotiations. Many institutions, NGOs, governments of EU member states, and business alliances have criticized the proposed thresholds, particularly the 1,000-employee limit. It is therefore uncertain if these thresholds will remain unchanged. The Commission may need to make compromises to achieve approval from the European Parliament and the European Council. For instance, a threshold between the original limit (>250 employees) and the proposed limit (>1,000 employees), such as 750 employees, might ultimately be adopted.

Thus, the question is not only “Is our company currently above these thresholds and thus subject to CSRD obligations?” but also “How close are we currently to these thresholds?” Companies with, for example, 800 employees should remain cautious, as lower thresholds are still possible.

How well-prepared are we for CSRD and ESRS? Have we initiated or completed a Double Materiality Analysis (DMA)?

The DMA represents one of the most resource-intensive steps in the entire ESRS implementation process. Companies that have already started or completed a DMA possess a valuable strategic asset. From a business perspective, it would be financially imprudent to leave this substantial investment unused, given the considerable effort and costs involved.

If companies have not yet begun their DMA work, they must consider how likely they are to become subject to the CSRD. If the probability is high, or if they already surpass the proposed thresholds, they should immediately initiate DMA activities. At Sustainserv, we estimate it takes approximately 4-5 months to complete a DMA, provided adequate resources are allocated, and no significant internal obstacles arise.

The Omnibus proposes a two-year deferral of reporting obligations and a significant reduction of ESRS data points. How can we capitalize on current preparations without risking unnecessary efforts?

Proposal 1 from the omnibus package proposes that Wave 2 and Wave 3 companies be granted a deferral of two years. This means that companies that would have reported on the 2025 period in 2026 will not have to report on 2027 until 2028. As things stand today (March 25, 2025), the European Parliament will discuss the postponement of two years at its meeting on April 1, 2025.  

The extension will now relieve some of the time pressure companies were concerned with. They will now have ample time to set up the necessary data processes and possibly fill in any existing gaps. Others are considering preparing a CSRD report in a kind of “dry run”.  

The results of the DMAs have also already led to changes in operating procedures and data processes at many companies. The European Commission is obviously not aware or conscious of how far the preparations of Wave 2 companies had already progressed when the Omnibus proposals were announced.

Which Disclosures to Plan For?

Another unanswered question regarding the proposed revisions is that approximately 70% of ESRS data points might be eliminated. But which ones might be eliminated remains to be seen and will be the subject of ongoing negotiations.  

This potential reduction in the scope of required disclosures was broadly welcomed, recognizing that the current granularity and detail required by ESRS pose substantial costs and effort for companies, often without clear value or users. Nonetheless, it remains uncertain exactly which 70% of data points will be removed, creating significant uncertainty for businesses.

Of the ten thematic standards of the ESRS, we see three as fundamental to the intent of the ESRS and expect them to be included in any future version of the rules:

• E1 – Climate Change
• S1 – Own Employees
• G1 – Governance

Based on our discussions with companies and those involved with the ESRS rulemaking process, E1 (Climate Change) is a fundamental topic that will likely be included in any future requirements. Similarly, S1 (Own Employees) and G1 (Governance) include similarly pertinent information consistent with the intentions of CSRD. Therefore, for those companies that have not conducted a DMA, but reasonably expect to be subject to future disclosure requirements, we suggest they take an initial look at these ESRS standards to start formulating an action plan to gather the necessary information for future reporting purposes.

CSRD: An Evolving Rule in a Dynamic World

We are witnessing an interesting example of the pendulum swing of regulations. There was a first, seemingly well-intentioned set of rules that once implemented, needed to be revised based on political shifts and the practical feedback of the companies subject to these new laws. While sometimes difficult and frustrating for those companies that need to respond to these laws, there is now an opportunity (and additional time) to respond to the updated laws in a thoughtful and more thorough manner. Our suggestion to those who are, or might be, subject to these laws is to take a deep breath, approach compliance in a strategic and structured manner and leverage any lessons learned to bring benefits to other aspects of your business.

In this era of increased demands for transparency and disclosure, this is not the first time we have seen such oscillations, nor will it be the last.

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