5.7 Omnibus Initiative

On February 26, 2025, the first proposals were presented as part of the Omnibus initiative, which could bring significant changes and shifts to current reporting requirements. This initiative follows on from the Budapest Declaration on the “New Deal for European Competitiveness” and aims to promote innovation while achieving decarbonization targets.

The initiative comprises a total of three packages for the year 2025:

• Omnibus package I (1^st quarter 2025): Sustainability reporting and due diligence obligations
• Omnibus package II (1^st quarter 2025): Investment simplification
• Omnibus package III (2^nd quarter 2025): Introduction of “small mid-caps” and removal of paper requirements

The proposals on sustainability reporting and due diligence (Package I) are of particular importance, as they propose amendments to the CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD). In addition, the European Commission has published a draft Delegated Act proposing amendments to the EU Taxonomy Regulation.

Among the most significant proposed changes is a “Stop the Clock” mechanism, which would postpone the implementation steps scheduled for January 1, 2025 and January 1, 2026 by two years each. The CSDDD could also experience an additional one-year delay in its start date. Alongside these timing adjustments, changes to the content (“content proposal”) of the respective regulations are also proposed, which are intended to take effect for the 2027 financial year (for reporting in 2028). These include a limited scope of application for the CSRD as well as additional criteria for the applicability of the Taxonomy disclosure requirements. Further, reporting under the regulations is to be simplified by adjusting both the reporting obligations and the required level of detail.

Specification of the CSRD/ESRS proposals

Scope: Whether a company falls within the scope of the CSRD should primarily depend on whether it has more than 1,000 employees. However, companies that would no longer be subject to mandatory regulatory reporting would have the option to report voluntarily in accordance with the sustainability reporting standard for small and medium-sized enterprises (VSME), for which EFRAG has already submitted an initial draft.[1]

According to the current CSRD, non-European companies are scheduled to be subject to reporting obligations from the 2028 financial year if they have a subsidiary or branch in the EU and exceed certain size and turnover thresholds. This principle would be maintained, but the turnover threshold for non-European companies operating in the EU would be raised from EUR 150 million to EUR 450 million. In addition, for reasons of consistency, the threshold for the EU branch under Article 40a would be raised from EUR 40 million to EUR 50 million, and the threshold for the EU subsidiary would be limited to large companies as defined under the Accounting Directive.

ESEF (Electronic Format): The requirement for electronic format with tagging would remain in place despite the Omnibus. However, it is clarified that the obligation to use the corresponding tagging standard would only apply once the tagging taxonomy is fully available - which is expected to take some time.

ESRS content: The European Sustainability Reporting Standards would be revised, with the current number of data points (over 1,000) to be significantly reduced. Although concrete proposals are not yet available, the intention would be to particularly reduce the number of required qualitative data points. Another proposed change would be the removal of sector-specific standards, including those for the financial sector. On the other hand, voluntary standards (VMSE) for SMEs would continue to be developed and would serve as a basis for voluntary reporting. A key element that would be retained is the double materiality analysis, which would continue to guide the determination of key topics and, consequently, the scope of reporting.

Value chain: Reporting on the entire value chain would basically be maintained, but the requirements for data collection along the value chain would be restricted. Information that may be requested from participants in the value chain - if they are not themselves subject to CSRD reporting – would be limited by the VSME standards. In future, these voluntary standards would define the boundaries for information that can be requested, thereby aiming to reduce the “trickle-down effect”.

Assurance: The proposed amendments would remove the potential transition to "reasonable assurance" from the CSRD, meaning that the external audit obligation would remain limited to "limited assurance."

Specification of the taxonomy proposals

Scope: Currently, European companies that fall under the CSRD must also report in accordance with the EU Taxonomy. However, the Omnibus Regulation would introduce an additional threshold for the application of the Taxonomy: a turnover minimum of EUR 450 million. EU companies below this threshold would still be required to report under the CSRD if they have more than 1,000 employees and meet one of the two financial thresholds but could use Taxonomy reporting on a voluntary basis. In addition, a delegated act is planned to further specify the details of voluntary reporting.

Materiality concept: Simplifications would be introduced in the materiality assessment for determining taxonomy eligibility and/or alignment. Specifically, a materiality threshold of up to 10% of the KPI denominators (cumulative per KPI) would apply for non-financial companies. In addition, these companies could refrain from reporting on alignment of operational expenditure if their eligible activities do not exceed 25% of their cumulative turnover.

Partial Taxonomy-alignment (opt-in): Currently, the Taxonomy only distinguishes between aligned and not-aligned activities. In the future, however, companies would be allowed to report voluntarily on their activities that fulfil only certain technical screening criteria without fully meeting all the criteria (partially aligned).

DNSH criteria for pollution prevention and control: The Taxonomy currently requires an assessment of the use and presence of substances that have been classified under the CLP Regulation itself and do not have a “harmonized classification”. In order to reduce the complexity and administrative burden for reporting companies, requirements related to substances under Regulation (EC) No 1272/2008 and Article 57 of Regulation (EC) No 1907/2006 should be removed or limited to substances with harmonized classification. The final decision will be made by the legislator, taking into account the public consultation.

Reporting templates: Currently, Taxonomy reporting is carried out using three reporting templates, which cover the directly reportable key figures - turnover, capital and operational expenditure (Turnover, CapEx and OpEx) - as well as additional templates for gas and nuclear energy activities. These KPI reporting templates would be simplified by introducing a clearer structure and reducing the number of data points by 70%.

Timetable and next steps

All proposals published on February 26, 2025, are still at the draft stage and may change significantly during the adoption process. The Delegated Act on the EU Taxonomy was open for public consultation until March 26, 2025. The other proposals, by contrast, were not released for public comment and must be approved by the European Parliament and the Council of the European Union in the "co-decision procedure".

On 16 April 2025, the "Stop-the-clock" directive was published in the Official Journal of the European Union (OJ) and entered into force the following day, after formal approval of the agreed text by the European Parliament on 3 April and its adoption by the Council on 14 April 2025. Member States are now required to transpose the directive into national law by 31 December 2025 to ensure the intended postponement of reporting obligations. The " content proposal" does not specify a fixed implementation date but includes a draft provision requiring implementation within 12 months of approval by the European legislators.

Recommended steps for Omnibus

1. Stay informed:
   Familiarize yourself with the proposed changes and their potential impact on your business.
2. Evaluate the potential impact:
   Analyze how the planned changes could impact implementation and reporting under the CSRD and Taxonomy.

3. Proactively protect your company against sustainability risks:

   Irrespective of possible legal changes, protecting your company against sustainability risks and considering the impact of your activities on people and the environment remains of paramount importance. Therefore, take a proactive approach by performing a basic double materiality assessment. This enables you to identify and assess the impacts, risks and opportunities for your company in a targeted manner and then implement appropriate management concepts.

4. Further development of your governance and reporting structures:
   Use the remaining time to prepare for the new requirements. Ensure that your internal reporting capacities and external audit requirements are adapted at an early stage.