The Omnibus Adjustment to CSRD: A Turning Point in EU Sustainability Reporting 1. IntroductionIn February 2025, the European Commission unveiled a sweeping
Omnibus Simplification Package proposing substantial amendments to key EU sustainability regulations — chief among them the
Corporate Sustainability Reporting Directive (CSRD). Framed as a recalibration rather than a rollback, the package aims to reduce complexity, lighten administrative burdens, and align obligations more tightly with size and capacity.
Yet its implications are profound: the Omnibus shifts the balance between ambition and pragmatism in corporate ESG reporting, reshaping who reports, when, and how deeply.
2. Key Changes Introduced by the OmnibusBelow is a structured breakdown of the material transformations proposed — many of which your original overview captured, albeit with room for nuance.
2.1 Timeline & Wave Shifts (“Stop-the-Clock”)- The Omnibus introduces a two-year delay to reporting obligations for Wave 2 (large undertakings) and Wave 3 (listed SMEs) under CSRD.
- Concretely: Wave 2 firms will now report for FY 2027 in 2028. Wave 3 firms report FY 2028 in 2029 (unless excluded by new scope thresholds).
- Meanwhile, earlier waves or entities already under the regime maintain their original timing.
2.2 Scope Adjustments (EU & Non-EU Entities)- EU entities: The proposal replaces the old “2 of 3 metrics” trigger (≥ 250 employees / ≥ €50 m turnover / ≥ €25 m balance sheet) with a stricter employee threshold of ≥ 1,000 plus either €50 m turnover or €25 m balance sheet. Only those meeting both will stay in scope.
- Non-EU firms: The EU turnover threshold jumps from €150 million to €450 million, and additional connection requirements apply: for instance, the foreign parent must either have a large EU subsidiary or a branch with turnover ≥ €50 million.
- A consequence: the number of companies in scope may shrink dramatically — some commentators estimate reductions on the order of 80 %.
2.3 Value-Chain / Supply-Chain Data Requests (“Value Chain Cap”)- One of the more novel proposals is a “value-chain cap”, which limits how much data a reporting company may legally compel from upstream or downstream entities falling outside CSRD scope.
- In practice, the cap ties requested information to what a non-CSRD entity could voluntarily report under a forthcoming VSME (voluntary SME) standard, to be developed via delegated acts.
- This acts as a protective “shield”: companies not in scope cannot be burdened with open-ended demands from larger reporting firms.
2.4 Assurance Regime- Under original CSRD plans, reporting would begin under limited assurance, with a transition toward reasonable assurance by 2028.
- The Omnibus proposal eliminates that escalation, so only limited assurance is mandated—reasonable assurance is no longer required.
- Correspondingly, the requirement to develop a European limited assurance standard by October 2026 remains, but the obligation to adopt a reasonable assurance standard is removed.
2.5 ESRS / Disclosure Requirements- The Commission proposes substantive simplification of the ESRS (European Sustainability Reporting Standards): fewer datapoints, streamlined templates, and removal of sector-specific ESRS entirely.
- The intent: reduce burden, eliminate overlap, and ensure consistency with other legislation (e.g. taxonomy, corporate law).
- Final exposure drafts for the revised ESRS are expected by mid-2025, with adoption later in the year.
2.6 Taxonomy & Alignment- The Omnibus also loosens mandatory EU Taxonomy disclosure obligations for certain entities. Under the proposed change, only very large firms would be required to report taxonomy alignment.
- Entities with ≤ €450 million net turnover (even if in future CSRD scope) may have the option to “opt in” to taxonomy reporting rather than being forced into full alignment.
- The proposal also introduces a materiality threshold for taxonomy disclosures and simplifies the “Do No Significant Harm” (DNSH) criteria for pollution prevention and control.
3. Consequences & Strategic ImpactsYour original sections on practical impacts were solid; the following reorganises them slightly and tightens linkages to the Omnibus changes.
3.1 Impacts for Companies (Inside & Outside Scope)Inside scope (very large, global firms):- The delay buys extra time to build data systems, governance structures, and staff capabilities.
- The removal of the move to reasonable assurance lowers long-term audit and assurance burdens.
- Requests to smaller suppliers for ESG data become bounded by the value chain cap and the emergent VSME standard.
- Firms may choose lighter or voluntary paths for taxonomy alignment rather than mandatory compliance.
Firms previously in scope but now excluded (mid-size, threshold victims):- They lose mandatory disclosure obligations; many may shift to voluntary standards (e.g. VSME, GRI) to maintain credibility.
- Existing momentum in ESG integration could stall, and a baseline of comparability across firms might weaken.
- The signal to suppliers and value chain partners may diminish — less pressure to engage in ESG dialogues or capacity building.
SMEs and non-CSRD suppliers/value chain actors:- They are less exposed to data demands and reporting obligations.
- But they may also lose visibility and pressure to improve sustainability practices, reducing overall chain ecosystem maturity.
3.2 Impacts for Investors, Lenders & Analysts- The shrinkage of scope (especially mid-size firms) will reduce the volume and uniformity of ESG disclosures — data gaps and information asymmetry risk rise.
- With only limited assurance and flexibility in reporting, stakeholder confidence in disclosed ESG data may weaken.
- Analysts will rely more on voluntary standards, third-party providers or sustainability ratings to fill gaps.
- Comparability across industries will suffer as fewer firms report under a common ESRS framework.
3.3 Impacts for Regulators, Enforcement & Member StatesThe narrower scope means fewer companies to monitor, reducing administrative and enforcement burdens.
- But Member States must carefully transpose the directive and ensure consistency in interpretation of limited assurance, value chain cap rules, and national deviations.
- The delay and changes may spark legal or political pushback from stakeholders arguing that environmental and social accountability is being diluted.
- The legislative negotiation is not yet done; the final text may shift further, creating uncertainty during the transition.
3.4 For Civil Society, ESG Advocates & Public Interest- Many will view the Omnibus as a rollback of transparency, particularly in sectors or firms now excluded.
- There will be pressure for robust voluntary disclosures to fill accountability gaps.
- Without sector ESRS, comparability and granular insights may decline, making benchmarking and advocacy harder.
- The omittance of reasonable assurance may raise concerns about credibility and audit rigor in ESG disclosures.
4. Risks, Critiques & Open Unknowns- Transparency dilution & fragmentation: Slimmer scope and simplified rules risk weakening the unified architecture of CSRD; comparability may erode across sectors.
- Assurance adequacy: Limited assurance alone may not suffice for forward-looking, complex ESG disclosures; stakeholders may question its rigor.
- Sector blindness: Dropping sector ESRS shifts burden to individual firms to interpret their sector’s risks — likely yielding inconsistent disclosures.
- Legislative instability: The Omnibus proposal still must navigate Parliament and Council; thresholds and rules could change materially.
- Transition misalignment: Firms that have already invested heavily in full CSRD readiness may find themselves excluded, or forced to scale back investments.
- Framework divergence: With fewer firms under the mandatory scheme and with optional taxonomy paths, alignment with ISSB, GRI, and other global standards may fragment.
5. Strategic Recommendations & Next StepsHere’s how different stakeholders might respond:
For affected companies (or those near thresholds):- Reassess scoping: Monitor final negotiations and estimate whether you will remain inside or fall outside under the new thresholds.
- Stagger investment: Delay full CSRD infrastructure investments until the legislative outcome is clearer, but continue building foundational data and governance systems that can adapt.
- Adopt voluntary standards: Even if excluded, consider disclosing under VSME, GRI, or others to maintain credibility.
- Engage advocacy & consultation: Provide comments during delegated act development (e.g. VSME, assurance standard) and liaise with associations and authorities.
For investors, analysts & lenders:- Adjust models and expectations: anticipate fewer mandatory disclosures, weaker assurance, and gaps in comparability.
- Leverage third-party data, ESG ratings, and alternative data sources.
- Press firms (voluntarily) for transparency beyond the minimum — particularly in supply chains and climate metrics.
For regulators, national authorities & oversight bodies:- Ensure consistent national transposition, especially for limited assurance regimes.
- Provide clear guidance on value chain caps, assurance practices, and voluntary standard development.
- Monitor legislative negotiations closely, and encourage alignment between member states to avoid fragmentation.
For civil society, standard setters & ESG advocates:- Promote strong voluntary disclosure norms and amplify calls for high standards even outside mandatory scope.
- Advocate for credible assurance standards and transparency in legislative debates.
- Use public pressure and market incentives to maintain momentum in corporate ESG practices, particularly among excluded mid-size firms.
6. ConclusionThe 2025 Omnibus proposal marks a critical inflection in the EU’s sustainability framework. While it retains core CSRD architecture — double materiality, ESG in the management report, a baseline assurance level — it retrenches significantly on speed, coverage, and stringency. The logic behind it is clear: reduce compliance burdens, sharpen proportionality, and allow firms time to adapt.
But this recalibration comes at a trade-off. Transparency, comparability, and assurance rigor may be diminished. Many mid-size firms may drop out of the formal regime altogether, leaving a patchwork of voluntary disclosures in their stead. Ultimately, the success or failure of the revised CSRD will depend on how stakeholders — companies, investors, regulators, and civil society — manage the transition, guard against backsliding, and maintain pressure for credible sustainability disclosure.
Sources for Omnibus CSRD Article- Deloitte — European Sustainability Reporting: Omnibus Update and Reporting Standards
- European Commission — Corporate Sustainability Reporting (CSRD)
- Grant Thornton — The Omnibus Package: EC Releases Proposals
- BSR — EU Omnibus Fact Sheet (Mar 2025)
- Skadden — European Commission Publishes ESG Reporting Omnibus Package
- European Commission — Omnibus Package (CSRD, ESRS, Taxonomy)
- Deloitte — Heads Up: Commission Proposes Reduction of CSRD Scope
- A&O Shearman — EU Omnibus and the CSRD – Ten Burning Questions
- Sodali — Breaking Down the Omnibus: Implications for the CSRD
- Mayer Brown — European Commission Presents “Omnibus” Simplification Package
- McDermott Will & Emery — Simplification Omnibus Package
- Morrison Foerster — Latest Developments on the Omnibus Package and ISSB
- Ropes & Gray — The Shape of EU CSRD and CSDDD to Come?