President of the European Commission, Ursula von der Leyen said: „Simplification promised, simplification delivered! We are presenting our first proposal for far-reaching simplification. EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy. This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way“.

Changes proposed by Omnibus I

Proposed changes include amendments to the Corporate Sustainability Reporting Directive (CSRD), EU Taxonomy, the Corporate Sustainability Due Diligence Directive (CSDDD) and Carbon Border Adjustment Mechanism (CBAM)

Key changes in the area of sustainability reporting (CSRD and EU Taxonomy):

remove around 80% of companies from the scope of the CSRD – only companies that have more than 1,000 employees and either a turnover above €50 million or a balance sheet total above €25 million will remain subject to the rules.
ensure that sustainability reporting requirements for large companies will not burden smaller companies in their value chains, by limiting the information that companies or banks falling into the scope of the CSRD can request from companies in their value chains with up to 1,000 employees.
revise and simplify the existing European Sustainability Reporting standards (ESRS), against which the companies remaining in scope will have to report.
delete the requirement on the Commission to adopt sector‑specific standards and keep the assurance requirement at the level of “limited” assurance, not moving in the future to the more demanding level of “reasonable”
limit reporting obligations under the EU Taxonomy to the largest companies with at least 1,000 employees and €450 million net turnover, while still allowing other large companies within the future scope of CSRD to report voluntarily.
A separate “stop the clock” proposal will also postpone by two years the reporting requirements for companies currently in the scope of CSRD which were scheduled to report as of 2026 or 2027. This is to give time to the co‑legislators to agree to the Commission’s proposed substantive changes.

Key changes in the area of sustainability due diligence (CSDDD)

Simplify sustainability due diligence requirements so that companies in scope avoid unnecessary complexities and costs, e.g. by focusing systematic due diligence requirements on direct business partners; and by reducing the frequency of periodic assessments and monitoring of their partners from annual to 5 years, with ad hoc assessments where necessary.
Reduce burdens and trickle-down effects for SMEs and small mid-caps by limiting the amount of information that may be requested as part of the value chain mapping by large companies.
Further increase the harmonisation of due diligence requirements to ensure a level playing field across the EU.
Remove the EU civil liability conditions while preserving victims‘ right to full compensation for damage caused by non-compliance, and protecting companies against over-compensation, under the civil liability regimes of Member States.
Give companies more time to prepare to comply with the new requirements by postponing the application of the sustainability due diligence requirements for the largest companies by one year (to 26 July 2028), while advancing the adoption of the guidelines by one year (to July 2026).

Key changes to CBAM:

Exempt small importers from CBAM obligations, mostly SMEs and individuals. These are importers who import small quantities of CBAM goods, representing very small quantities of embedded emissions entering the Union from third countries. This works by introducing a new CBAM cumulative annual threshold of 50 tonnes per importer, thus eliminating CBAM obligations for approximately 182,000 or 90% of importers, mostly SMEs, while still covering over 99% emissions in scope.
Simplify the rules for companies that remain in CBAM scope: on authorisation of CBAM declarants, as well as the rules related to CBAM obligations, including the calculation of embedded emissions and reporting requirements.
Make CBAM more effective in the long term, by strengthening the rules to avoid circumvention and abuse.
This simplification precedes a future extension of CBAM to other ETS sectors, downstream goods, followed by new legislative proposal on the scope extension of CBAM in early 2026.

Further Developments

On 3 April 2025, the European Council approved the Commission’s „stop-the-clock“ proposal. This proposal postpones the dates of application of certain corporate sustainability reporting and due diligence requirements, as well as the transposition deadline of the due diligence provisions.

The stop-the-clock proposal will postpone:

the CSRD requirements for large entities that have not yet started reporting, as well as SMEs, by two years (from fiscal 2025 to 2027 and 2026 to 2028 depending on original application date), and
the transposition deadline and first phase of application of the CSDDD by one year (from July 2027 to July 2028).

Following the adoption, the legislative act will be published in the EU’s Official Journal and enter into force on the day following that of this publication. Member states must transpose this directive into their national legislation by 31 December 2025.

Recent Developments

On 25 June 2025, the European Council reached an agreement on its negotiating position regarding the substantive changes to CSRD and CSDDD. The key takeaways of the position which expand on the Commission’s Omnibus are as follows:

On CSRD the Council supports the Commission proposal on scoping for EU companies to set a threshold of 1,000 employees, but go beyond the initial proposal to increase the financial net turnover threshold on an individual or group level to €450 million in net turnover (from €50 million).

While Omnibus I did not propose any changes to the scope of CSDDD, the Council proposes that the threshold should be increased to 5,000 employees (from 1,000 employees) and €1.5 billion net turnover (from €450 million). The Council further agrees that the CSDDD transposition deadline should be deferred by one year, to 26 July 2028.

Voting on the final position by the Members of European Parliament is expected in October 2025. The Parliament and the Council will then enter into trilogue negotiations with the Commission aiming to find a common final agreement on the amendments to the CSDDD and CSRD, which will likely not be reached before 2026.

Sources:

https://ec.europa.eu/commission/presscorner/detail/en/ip_25_614
https://finance.ec.europa.eu/news/omnibus-package-2025-04-01_en
https://www.consilium.europa.eu/en/press/press-releases/2025/04/14/simplification-council-gives-final-green-light-on-the-stop-the-clock-mechanism-to-boost-eu-competitiveness-and-provide-legal-certainty-to-businesses/
https://www.consilium.europa.eu/en/press/press-releases/2025/06/23/simplification-council-agrees-position-on-sustainability-reporting-and-due-diligence-requirements-to-boost-eu-competitiveness/
https://www.deloitte.com/nl/en/issues/climate/omnibus-csrd-csddd-eu-taxonomy.html

Photo by Mikhail Nilov: https://www.pexels.com/photo/law-book-in-a-podium-8730785/