The EU Commission’s Omnibus has finally arrived, promising to ease the regulatory burden on businesses grappling with the complexities of sustainability reporting. While the changes aim to streamline processes and reduce administrative headaches, they’ve also sparked a wave of uncertainty. Is this a genuine simplification, or does it just add more layers to an already intricate puzzle?

What’s Changing?

The Omnibus targets key sustainability regulations like the CSRD, CSDDD, and EU Taxonomy, with a focus on reducing complexity and easing the load for businesses. Here’s the breakdown:

CSRD (Corporate Sustainability Reporting Directive)

• Fewer companies in scope: The threshold has been raised, meaning only large companies with 1,000+ employees and €50M+ turnover (or €25M+ balance sheet) need to comply.
• SMEs get a break: For those not subject to mandatory reporting, there will be the option to report voluntarily. A voluntary reporting standard is in the works, based on the Voluntary SME standard developed by EFRAG.
• Simpler ESRS: The European Sustainability Reporting Standards (ESRS) will be revised to reduce data points, clarify ambiguities, and improve consistency. Sector-specific standards are off the table.
• No reasonable assurance: The shift to stricter assurance requirements has been removed - for now.
• Postponed reporting: The Commission is postponing reporting requirements for wave 2 and wave 3 companies by 2 years, so those companies due to report in 2026 and 2027 are now not due to report until 2028 and 2029 respectively
• Value Chain Cap: In order to protect smaller companies in supply chains from excessive reporting requests, the value chain cap will be strengthened. This means the cap would apply directly to the reporting company rather than being a limit on what ESRS can specify. The limit would be defined by the voluntary standard to be adopted by the Commission.

CSDDD (Corporate Sustainability Due Diligence Directive)

• Delayed deadlines: Companies get an extra year to prepare, with the transposition deadline and first phase of application postponed by one year.
• Limited requests: Larger companies can no longer request information beyond the voluntary CSRD standard from undertakings in their value chain with an average of 1,000 or fewer employees.

EU Taxonomy

• Simpler templates: Reporting templates are being streamlined, cutting data points by nearly 70%.
• Flexibility for smaller players: Taxonomy reporting is now voluntary for companies with turnover below €450M.

The Big Questions

While the Omnibus offers relief for some, it leaves others in limbo. Here’s what’s keeping companies up at night:

1. ESRS Revisions: Wait or Act? Many companies have already invested heavily in preparing for ESRS disclosures. The promise of revisions is welcome, but without specifics, it’s unclear whether they should continue their current efforts or hit pause. The delayed deadlines offer breathing room, but the Commission has hinted that further changes could be on the horizon. Should companies stay the course or wait for more clarity?

2. Double Materiality: Still a Headache? Despite simplification efforts, double materiality remains one of the most complex aspects of the CSRD. The Omnibus promises further clarification, but will it help—or force companies to fundamentally rethink their materiality assessments? For those already well into their sustainability journeys, this uncertainty could mean revisiting (and potentially redoing) significant work.

3. Green Deal Goals: How Do We Get There? The EU insists that the objectives of the European Green Deal and the Sustainable Finance Action Plan remain intact. But with lighter reporting requirements, how will progress be tracked and measured? Is this a case of “less is more,” or are we sacrificing accountability for ease? The Commission argues that reducing the regulatory burden will drive growth and investment, but without clear guidance, it’s hard to see how sustainability will remain a priority for businesses.

4. Voluntary Reporting: Opportunity or Burden? For SMEs, the new voluntary reporting standards could be a chance to stand out and showcase their sustainability efforts. But without mandatory requirements, will companies have the resources and motivation to invest in robust reporting? The lack of sector-specific guidance could also leave smaller companies struggling to navigate the complexities of sustainability reporting. What support will be available for those who choose to disclose voluntarily?

5. Limited Assurance: Clarity Needed. The lack of clear assurance standards is already causing headaches. The Omnibus highlights the prevalence of overcompliance and promises targeted assurance guidelines by 2026. However, without adopting established frameworks like ISSA 5000, the ambiguity around limited assurance requirements is likely to persist. This could create challenges not just for reporting companies but also for assurance providers, leading to inconsistencies and inefficiencies.

What’s Next?

The Omnibus is a mixed bag. It simplifies some aspects of sustainability reporting but introduces new uncertainties. Companies must stay agile, reassess their strategies, and prepare for a landscape that’s still evolving.

For some, the changes offer a welcome reprieve. SMEs and “fourth wave” companies, in particular, may find the reduced requirements a relief. But for those already deep in the trenches of sustainability reporting, the Omnibus raises as many questions as it answers.

Let’s navigate the new rules together. Reach out to selabe.kute@designbridge.com discuss how these changes impact your business and how you can stay ahead in an evolving regulatory landscape.