Major Changes in the EU’s Omnibus Package

The EU “Omnibus I” package was recently finalized and approved by the European Parliament in mid-December 2025. The initiative was proposed in February in an effort to reduce administrative complexity for businesses and government, while boosting competitiveness. The package relaxes sustainability obligations with the intent to align requirements with real-world business capacity for compliance.   

What Is the EU Omnibus Initiative? 

The Omnibus initiative started with a Commission proposal in February 2025 designed to simplify and reorganize several major sustainability-related EU laws. The primary legislative targets were: 

• Corporate Sustainability Reporting Directive (CSRD): Transparency and ESG reporting obligations. 

• Corporate Sustainability Due Diligence Directive (CSDDD): Supply-chain due diligence on human rights and environmental impacts. 

Narrower Reporting Thresholds  

The European Parliament and Council reached a provisional agreement that significantly narrows the scope of sustainability requirements for companies: 

• CSRD reporting duties will now only apply to companies with over 1,000 employees and €450 million turnover, significantly excluding many smaller organizations that were previously in scope. 

• CSDDD obligations on human rights and environmental due diligence apply only to corporations with over 5,000 employees and €1.5 billion turnover. 

These changes sharply reduce the number of firms affected and delay compliance timelines for many organizations. Critics argue this weakens EU sustainability ambitions, while advocates say it improves proportionality and competitiveness. 

CSRD Updates 

Beyond the changed reporting threshold, CSRD reporting requirements have been updated. Under the initiative, reporting will become more quantitative and less complex for companies.  

One of the biggest impacts is that sector-specific reporting becomes voluntary. This means companies are not required to respond to expanded sector question sets and there is no obligation to disclose sector data points. This reduces the burden on companies because they do not need to report on issues that are not material to their business, even if those issues are common in the sector. Instead of a tedious checklist, expanded sector questions effectively become input material for risk identification and guidance for double materiality assessment (DMA) scoping. 

Additionally, companies with fewer than 1,000 employees are protected from “trickle-down” requests for additional disclosures” that go beyond voluntary standards.  

The Commission will launch a digital portal with templates and guidelines on the EU and national level, although a specific launch date has not yet been announced.  

CSDDD Updates 

Companies will no longer have to comprehensively map their entire value chains and can instead focus their due diligence in areas where risks are most likely to occur. This does still assume that your company is aware of and actively ranking risks across your value chain to determine what risks are most likely but reduces the formal reporting requirement. Companies no longer need to report on every single point in the value chain as long as they can demonstrate knowledge of their biggest risks. They are still expected to: 

• Assess risks based on their likelihood and severity. 

• Focus on “salient” and “material” risks. 

• Explain why certain risks are prioritized over others. 

 Additionally, companies are no longer required to adopt climate transition plans compatible with the Paris Agreement while maximum penalties are now capped at 3% of a company's net worldwide turnover.  

Liability is now governed by national law rather than a harmonized EU scheme, and the new compliance deadline is July 2029. 

Related Policy Delays 

The CSRD and CSDDD updates occur in the context of other sustainability policy delays in the EU, signaling a shift in how environmental ambitions and economic considerations are being rebalanced. There are two main regulations to consider. 

EU Deforestation Regulation (EUDR) 

Lawmakers agreed on a one-year delay to the implementation of the anti-deforestation regulation, pushing key compliance deadlines into 2026–27 with specific dates to be determined. 

Carbon Border Adjustment Mechanism (CBAM) 

Policymakers are considering widening the Carbon Border Adjustment Mechanism to cover more products to close “carbon leakage” loopholes. The current regulation only covers:  

• Steel and iron 

• Cement 

• Aluminum 

• Fertilizers 

• Hydrogen 

• Electricity 

The European Commission is actively exploring scope expansion to cover downstream products and extensions to the value chain. The most recent draft proposal suggests approximately 180 downstream products made from covered materials to close loopholes, including: 

• Machinery and specialized industrial equipment 

• Automotive parts 

• Washing machines and other appliances 

• Certain construction materials 

• Farming and heavy equipment 

What Do the Omnibus Changes Mean for Businesses? 

The Omnibus I package largely takes the teeth out of the EU’s corporate sustainability policies by inflating reporting thresholds and relaxing reporting requirements. About 80% of companies now fall out of scope for CSRD and 70% for CSDDD. However, companies still affected will need to take steps to prepare. 

• Keep monitoring new thresholds and definitions, as the updates include a review clause which can possibly extend scope for CSRD and CSDDD in the future. 

• Review and reassess national-level obligations, as there has been divergence in requirements between countries in the past. 

• Prepare for harmonized digital reporting across EU member states. 

While many companies are now “off the hook,” awareness and flexibility remain key. The legislative process is iterative and further refinements are expected, such as clarifications on risk assessment and prioritization as well as changes to civil liability rules and sanctions frameworks.  

Additionally, major EU directives like these require the Commission to reevaluate the law after a period of 3-5 years and propose updates that may expand or contract scope.  

Omnibus compliance means preparing for ongoing change rather than expecting a final rulebook. Monitoring remains critical and over the near and long term.