EU Omnibus Package: 10 things you should know about the proposed changes to key sustainability legislation
11 min read
The European Commission published an "Omnibus" package of proposed changes on 26 February, marking the start of a process that could result in significant changes to key EU laws on sustainability reporting, diligence and trade. Three distinct legislative proposals would make changes to the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD) and Carbon Border Adjustment Mechanism (CBAM). In addition, the Commission has published (for public consultation) a draft proposal for amendments to delegated acts made under the EU Taxonomy Regulation. The Commission also intends to propose amendments to the delegated regulation which established the first set of European sustainability reporting standards (ESRS).
The timing of these proposals is critical, with many companies in the ‘second wave’ of implementation of the CSRD already preparing to report. Understanding how the proposals (and uncertainty about the final position) may impact current implementation planning will be a key focus for companies across all sectors.
Here are 10 things you should know:
1. The Omnibus Package contains proposals and is not a change in law… Yet
The Commission's proposed changes will need to go through the EU's legislative process with scrutiny and approval of the European Parliament and Council. There are early strong indications that the process will be fast-tracked, but even that could take several months and the final result may look very different.
Companies will need to take a strategic view now on application to adapt proactively not reactively, bearing in mind the uncertainty of the legislative process, and companies' expected obligations under other European Green Deal regulations such as the EU Forced Labour Regulation (EUFLR),1 EU Deforestation Regulation (EUDR),2 EU Ecodesign for Sustainable Products Regulation,3 and EU Batteries Regulation4.
2. Companies in scope of the CSRD reduced by 80% but no change in scope to the CSDDD
The proposal would revise the CSRD definition of 'large companies' caught by the "second wave". Replacing the existing test, which captures companies that meet any two of three criteria being (1) 250 employees, (2) turnover of €50M, (3) balance sheet of €25M, the proposal would utilise employee numbers as an initial test. Only if the revised threshold of 1,000 employees is exceeded would one of the two financial metrics be relevant.
The final group of companies captured by the CSRD will be non-EU undertakings with a significant net turnover in the EU and a qualifying subsidiary or branch (the "fourth wave"). This group is due to report on data from FY2028 in 2029. These dates have not been amended, but the net turnover threshold in the EU is proposed to be raised from €150M to €450M. The threshold for a branch would be increased from €40M to €50M, and the subsidiary undertaking would need to qualify as a "large undertaking" under the Accounting Directive.
The Commission estimates that these amendments will reduce the companies in scope of CSRD by c. 80%. Companies will need to consider whether their own metrics mean they could fall out of scope, and what that means for their strategy and related compliance.
There are no proposals to amend the turnover and employee thresholds for the CSDDD.
3. “Stop the clock”: Application may be postponed… but not for everyone
CSRD: Listed companies are the "first wave" of companies in scope and are already in the process of reporting on FY2024 data. The Omnibus proposal does not change that obligation but seeks to postpone the application of CSRD obligations for companies, in the "second wave" and "third wave". Second wave companies would see their reporting period pushed back from FY2025 to FY2027, which would mean submitting their sustainability statements in 2028. No delay is envisaged for those currently reporting in 2025, and subject to the revised thresholds (for which, see below), those “first wave” reporters that will continue to fall within scope, may not be required to publish a further sustainability report until 2028. Third country parent undertakings in the "fourth wave" due to report in 2029, would continue to do so.
This raises important considerations for the majority of Member States that have already transposed the CSRD, as well as for those that have not. Companies are considering scenarios that include staying on course to comply, anticipating further adjustments to the proposed timeline, as well as the European legislature failing to reach an agreed text.
CSDDD: The proposal would give Member States an additional year (until 26 July 2027) to transpose the CSDDD into national law and would extend the application date for the first wave of in-scope companies by one year, until 26 July 2028. The proposal advances the deadline for the Commission to publish due diligence guidelines from 26 January 2027 to 26 July 2026. This would give companies in the first wave two years to familiarise themselves (and implement) the practical guidance and best practices included in the Commission's guidelines before the CSDDD applies to them.
It will take considerable time and resource to prepare for the core diligence and reporting obligations (summarised here5) and companies should continue to consider – with a risk-based approach - how to incorporate human rights and environmental due diligence into their policies and operations.
CBAM: The proposal would delay the requirement to purchase CBAM certificates until 2027, as opposed to 2026 currently.
4. Civil liability: no CSDDD-specific EU-wide regime, but exposure remains under national law
The civil liability provisions have been among the most contentious elements of the CSDDD. Member States are currently required to ensure that companies can be held liable for damages suffered by third parties where they have intentionally or negligently failed to comply with the obligations under the CSDDD. Member States must also permit trade unions and NGOs to bring claims on behalf of third parties in certain circumstances.
Under the proposal, the CSDDD-specific, EU-wide civil liability regime would be removed. Instead, companies may face liability under existing applicable national laws for failure to comply with the requirements under the CSDDD (which may vary from country to country). However, Member States must still ensure that victims of adverse impacts would have effective access to justice and be entitled to full compensation where a company is held liable for damage pursuant to national law.
With respect to enforcement by supervisory authorities, the requirement to adopt maximum penalties of not less than 5% of the net worldwide turnover would also be removed completely (without prejudice to any national laws that exist in this regard). The Omnibus approach respects the diversity of legal systems across EU Member States, while also preserving victims' effective access to justice and remedies through existing national mechanisms. It also means companies may face forum-shopping and a fragmentation of liability regimes when allegations are raised around adverse impacts of their operations.
5. Simplified reporting standards and reduced datapoints
The proposal includes the Commission's stated aim to "substantially reduce" the number of mandatory ESRS datapoints. It is not currently clear how many datapoints would be removed from the ESRS as part of this exercise, but we anticipate it could be significant. To further reduce the reporting burden on companies, the proposal also deletes the Commission’s mandate to issue sector-specific standards. Businesses should continue to prepare for compliance by focussing on strategically important areas while monitoring the final decisions on reporting requirements.
6. CSDDD: Focus on tier 1 suppliers, but ongoing vigilance needed
The proposal removes obligations for companies to conduct due diligence beyond their direct, tier 1 suppliers. Companies would only have to look beyond their direct business partner (i.e., at the level of indirect suppliers) if they have reason to suspect that adverse impacts have arisen or may arise (so still need to monitor these). This change aims to simplify compliance requirements and reduce the burden on companies, focusing due diligence efforts on direct suppliers rather than the entire supply chain. Companies will still be required to identify, prevent, and mitigate adverse impacts within their tier 1 suppliers, but they will no longer be obliged to extend these efforts further down the supply chain, unless they have received information, for example, from credible NGOs or media reports, regarding indirect suppliers.
7. CSRD reporting to maintain double materiality standard, but obligation to put into effect transition plan under CSDDD amended
Despite all the changes proposed, companies would continue to apply the double materiality principle, requiring them to report on both their internal risks and opportunities related to sustainability, as well as the external impact of their operations on the environment and society. This includes mandatory reporting on whether their strategy aligns with the 1.5 °C target under the Paris Agreement and the objective of achieving climate neutrality by 2050. However, under the CSDDD proposal, the current obligation to "adopt and put into effect a transition plan for climate change mitigation" would be amended, removing the obligation to "put into effect" the transition plan and clarify that "adoption" of a transition plan includes outlining implementing actions that have been planned and taken.
8. CBAM: reducing application to a tonnage threshold, removing 90% of participants from scope
The proposal includes significant changes to the CBAM Regulation, aiming to make it easier for authorities to administer, and for importers to comply. The changes include: (i) introducing a tonnage threshold that would exclude smaller importers from the scope of the regulation, which is expected to remove approximately 90% of participants from scope; (ii) simplification of the reporting requirements and calculations, including delaying the deadline for submitting CBAM declarations to 31 August for the previous calendar year; (iii) calculation of embedded emissions to be limited to the same system boundaries as the ETS; and (iv) minor changes to the product scope.
9. Taxonomy flexibility? CSRD amendments regarding Article 8 Taxonomy reporting, and separate amendments to the Taxonomy Disclosures, Climate and Environmental Delegated Acts
The proposal includes amendments to the CSRD regarding Article 8 Taxonomy reporting, aiming to streamline and clarify reporting obligations. In addition, there are separate amendments to the Taxonomy Disclosures, Climate, and Environmental Delegated Acts. Some of these changes are intended to enable companies "in transition" to benefit from voluntary Taxonomy reporting (on full or partial Taxonomy alignment); deciding for themselves how to communicate their transition strategies and progress without the pressure of mandatory disclosures, while also attracting investments. Unlike the other changes, as delegated acts, the Commission may propose and adopt amendments directly, subject to non-objection by the European Parliament and Council, so the amendments will not face the same legislative hurdles as for CSRD, CSDDD and CBAM. The Commission has published a consultation seeking feedback on a proposed delegated regulation seeking to amend the three acts.
10. Strategic opportunities and competitive advantages… while we wait
Recognising that the proposed changes are driven by a desire to increase European competitiveness and reduce the regulatory burden,6 these laws can also present strategic opportunities for companies.
Each distinct legislative proposal will now move to the co-legislators – the European Parliament and Council – and could advance at its own speed. The first proposal to postpone the dates of application of the CSRD and CSDDD could be fast-tracked, whereas the second proposal to amend the substantive provisions may take longer. The Council of the EU has established a new committee specifically to deal with the proposal to amend the CSRD and CSDDD (rather than allocating the file to an existing group). The proposed regulation to amend CBAM may move at a different speed. The proposed Taxonomy Delegated Regulation is open for public consultation until 26 March 2025 and will then be adopted by the Commission, subject to any objections by the Parliament and the Council.
In the longer term, by aligning with the updated regulations and adopting best practices in sustainability reporting, due diligence and trade, companies have an opportunity to enhance their reputation, build trust with stakeholders, and potentially in the longer term gain a competitive advantage. Proactive compliance can lead to improved operational efficiencies, better risk management, and access to new markets. Companies that are early adopters may also benefit from increased investor confidence and customer loyalty, positioning themselves as leaders in sustainability and corporate responsibility.
Dominic Oben (Trainee, London) and Ruth Benbow (Knowledge Manager, London) contributed to the development of this publication.
1 See our client alert "EU Adopts Forced Labour Ban: 8 Things to Know" available here.
2 See our client alert "EU agrees a delay to the application of the Deforestation Regulation", available here.
3 See our client alert "Eight key aspects to know about the EU Ecodesign for Sustainable Products Regulation" available here.
4 See our client alert “New EU Batteries Regulation: introducing enhanced sustainability, recycling and safety requirements”, available here.
5 See our client alert “Time to get to know your supply chain: EU adopts Corporate Sustainability Due Diligence Directive”, available here.
6 See our client alert “The EU Omnibus package is coming: what to expect?”, available here.
White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.
This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
© 2025 White & Case LLP
