The European Commission is expected to unveil an "Omnibus package" that would modify certain key EU laws on sustainability reporting, towards the end of February. The reported aim is to simplify sustainability-related reporting obligations, but much uncertainty remains.
An Omnibus package
The objectives of the Omnibus package are widely expected to be to simplify sustainability-related reporting obligations and align existing sustainability requirements under the Corporate Sustainability Reporting Directive ("CSRD"), the Corporate Sustainability Due Diligence Directive ("CSDDD") and the EU Taxonomy. Other EU legislation such as the EU Carbon Border Adjustment Mechanism ("CBAM") could also be included. It is not clear whether this will be a formal legislative proposal, or merely a 'roadmap' with a legislative proposal to follow later. While the precise details are unknown at this stage, recent communications from the Commission give some indication as to the direction of travel.
The Draghi Report and the Commission's Competitiveness Compass
In September 2024, Mario Draghi's report "The future of European Competitiveness" pointed to a wide range of areas that would help the EU improve its competitiveness in light of the need to decarbonize industry and adapt to changing technologies. The report indicated that certain EU sustainability reporting obligations have not always been fully coherent.1
As it begins its new five-year mandate, the Commission unveiled a "Competitiveness Compass". In that document, the Commission promises to deliver "an unprecedented simplification effort". It has also put targets to that statement suggesting that the Commission will aim to reduce reporting burden on all companies by at least 25%, and at least 35% for small and medium companies (SMEs).2
In the Competitiveness Compass, the Commission stated that this Omnibus package will aim to simplify sustainable finance reporting, sustainability due diligence and taxonomy, among other areas. The CBAM would also be simplified for smaller market players. The aim is to mobilise investment in the clean transition by aligning with the needs of investors and addressing the downstream effect of these rules on SMEs.3
What next?
We will have more clarity once the Omnibus package is unveiled by the Commission, expected at the end of February 2025 but a delay cannot be excluded.
In case this takes the form of a formal legislative proposal, to amend the directives in question, this will start the 'ordinary legislative process', in which the European Parliament and Council, as co-legislators, to hammer out a deal based on the Commission's proposal, which may involve substantive amendments to the directives. The EU's legislative process is complex, and the pieces of legislation at issue were adopted after especially long and difficult negotiations. Thus, whatever the content of the Commission's proposal, there is considerable uncertainty as to content of the legislation that might emerge from the process, and the timing of that.
In the meantime, many Member States have adopted national laws that transpose the obligations under the existing EU directives. Formally, there is no obligation under EU law to revoke these, but it remains to be seen how different national legislatures proceed in the interim.
Similarly, many companies have invested in preparing for the current EU directives coming into effect. These companies will need to consider different scenarios of repeal, mitigating strategies and maintaining operational flexibility to adjust to the evolving legal, and competitive, landscape.
Ruth Benbow (Knowledge Manager, London) contributed to the development of this publication.
1 Mario Draghi, "The future of European competitiveness, Part B", 9 September 2024, available here ("Draghi Report"), page 146
2 EU Commission, "A Competitiveness Compass for the EU", 29 January 2025, available here ("Competitiveness Compass"), p. 17
3 Competitiveness Compass, pp. 17-18.
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