Since the appointment of the new EU Commission and the publication of the Draghi report, there have been whispers that the EU is looking to ‘simplify’ existing regulations governing the EU’s sustainability agenda. This culminated in the publication of the Omnibus Package, the Commission’s plan to reduce reporting and regulatory burdens for small and medium-sized enterprises (SMEs) across Europe. The package comes in the midst of a growing trade war, with an increasingly vitriolic tit-for-tat of tariffs. While this proposed package is the first of many, readers should note that these are proposals and are subject to change.

What is the Omnibus Package?

In a nutshell, the Omnibus Package is directly aimed at reducing the reporting burden on SMEs. The two regulations it is currently targeting are the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDD/CS3D). The package also covers some aspects of financial investment, in particular the investEU Regulation and the Carbon Border Adjustment Mechanism (CBAM).

CSRD

In relation to the CSRD, the most significant change would be to the scope of the Directive. The proposed Omnibus Package seeks to limit the scope of mandatory reporting to only those companies with more than 1,000 employees and/or a turnover of more than EUR 50 million. Effectively reducing the affected undertakings by more than 80%.

For foreign companies, such as those from ASEAN, the proposed changes are to increase the thresholds from a net turnover of 150 million to 450 million and the branch threshold from the current 40 million to 50 million. There are also plans to revise the European Sustainability Reporting Standards (ESRS) by exploring ways to reduce the number of data points.

CSDDD

Among the most notable and controversial proposals is the abolition of EU-wide civil liability for companies. Instead, liability will now be based on existing national laws. While welcomed by most businesses, this change can be argued to be a double-edged sword. From a compliance perspective, it can be seen as a win for business security and competitiveness. On the other hand, the removal of harmonised EU conditions for civil liability will require companies to navigate the different civil liability laws in the countries in which they operate.

In addition, other notable proposed changes include the extension of the transposition deadline by one year, to 2028, and to simplify the reporting burden by increasing the frequency of periodic assessments and updates from one to five years.

CBAM

The most notable change to CBAM in the proposal is the increase of the de minimis exemption threshold to 50 tonnes mass. At the current stage of the proposal, there is no indication of the value of the shipment. More information on the current de minimis exemption can be found here. The proposal to delay the sale of CBAMs by one year to 2027 is also included in the omnibus package.