The EU has been at the forefront of sustainability legislation. A changing world, competitiveness issues, geopolitical upheavals and excessive administrative costs have made necessary a simplification of sustainability obligations for companies. This means more time to adapt, fewer companies affected, and fewer datapoints to report, but the clock is just paused, not stopped.
On 26 February 2025, the European Commission published the first ‘Omnibus Simplification Package’, a sweeping legislative proposal to streamline EU sustainability obligations that had been criticised for their complexity and compliance burden.
Affected initiatives
The Omnibus I Package streamlines three major UE legislative initiatives:
- Corporate Sustainability Reporting Directive (CSRD). Sustainability disclosure requirements and ESRS standards.
- Corporate Sustainability Due Diligence Directive (CS3D). Supply chain human rights and environmental due diligence
- EU Taxonomy Regulation. Classification system for environmentally sustainable activities
An additional Directive, called “Stop the Clock”, formally delays mandatory ESG reporting and due diligence deadlines by two years. Together with the Omnibus I Package, most companies can expect to see postponement and/or simplification of requirements for their ESG obligations.
Main changes in Omnibus-affected regulations
| Provision | Before Omnibus I (Original Rules) | After Omnibus I |
|---|---|---|
| CSRD — Companies in scope | ~50,000 EU companies | ~5,000–6,000 EU companies (large PIEs only; listed SMEs can opt out for 2 more years) |
| CSRD — SME reporting | Listed SMEs in scope from FY 2026 (VSME standard mandatory) | Listed SMEs can opt out until FY 2028; voluntary VSME standard only |
| CSRD — ESRS data points | ~1,000+ disclosure data points required under full ESRS | Reduced by ~50-70%: fewer mandatory, more entity-specific; double materiality retained but scoped |
| CSRD – 3rd party assurance | Limited assurance required from FY2024; reasonable assurance to follow | Limited assurance required; phase-in of reasonable assurance delayed indefinitely |
| CS3D – Employee threshold | > 500 employees (EU) / > 250 employees (high-risk sectors) | > 1,000 employees (EU) / non-EU: > €450M turnover in EU |
| CS3D – Turnover threshold | > €450M net global turnover | > €1500M net global turnover |
| CS3D – Indirect business partners | Full due diligence required over entire value chain including indirect partners | Narrowed to direct business relationships; indirect only on plausible information basis |
| EU Taxonomy – Simplified reporting | No simplified template available; full KPI disclosure | Simplified voluntary template for companies not in full CSRD scope. Streamlined templates and KPIs |
Omnibus I obligations by company size in the hospitality sector
| Company Size | >1000 employees €450 million net turnover | >250 employees, >€50M turnover, OR >€25M balance sheet | <250 employees |
|---|---|---|---|
| CSRD Sustainability Reporting | YES – From FY 2027 (reporting in 2028) | Not directly, but will be affected by large companies value chain reporting | N/A |
| ESRS Standards applicability | Full ESRS set (but reduced as per Omnibus I) | VSME voluntary standards | VSME voluntary standards |
| CS3D (Due Diligence) | YES (transposition date delayed) – Phase-in starting at companies with >5,000 employees. Environmental requirements lessened | When reporting for others as part of their value chain, no obligation to go beyond VSME’s scope | N/A |
| EU Taxonomy Reporting | YES – Simplified template with reduced requirements and datapoints | N/A | N/A |
What about non-EU companies?
The CSRD and CS3D were deliberately designed with an extraterritorial reach to avoid a ‘race to the bottom’ where non-EU parent companies operating in Europe escape obligations that apply to their EU peers. The table below compares how obligations apply depending on where a company is headquartered.
| Obligation / Framework | EU-Based Company | Non-EU Company (Third Country) |
|---|---|---|
| CSRD Reporting Trigger | Thresholds based on EU Accounting Directive (employees + turnover + balance sheet); direct obligation | Obligation if: >€450M net turnover in the EU AND at least one EU subsidiary (large) or EU branch (>€200M turnover). Third-country parent reports on group basis. |
| Applicable Reporting Standard | European Sustainability Reporting Standards (ESRS) – developed by EFRAG | Third-country entity ESRS (ESRS G1 to be adapted) or equivalent if mutual recognition granted by the Commission |
| CS3D Due Diligence Scope | Direct obligation: phase-in based on employee count/turnover (thresholds raised under Omnibus I). Own operations + direct business partners. | Applies if: >€1500M net EU turnover (revised upward under Omnibus I). Must also cover EU value chain activities. |
| EU Taxonomy Disclosure | Required for large PIEs subject to CSRD; voluntary for others with simplified templates available. | Required only for EU-based subsidiaries/branches that are themselves in scope of CSRD. Group-level voluntary adoption possible. |
| Supervisory / Enforcement Body | National Competent Authorities (NCAs) in each Member State; coordination via ESMA for listed companies. | NCA of the Member State where EU subsidiary/branch is registered. EC may grant equivalence to third-country frameworks. |
| Value Chain / Supplier Impact | In-scope companies must collect sustainability data from suppliers (SME shield: proportionate data points only, capped datapoints list). | As value-chain partners of EU in-scope companies, non-EU suppliers face indirect pressure to provide sustainability data; no direct legal obligation. |
In summary: breathe, but keep watching the clock
The Omnibus I Package has been well-received by companies as it eases obligations and delays the timeline. Companies that were already working on their ESG strategies and reporting will be able to consolidate and streamline their processes, while companies that had not yet addressed these issues have some extra room to breathe. As further simplification efforts by the UE are likely, with many sustainability regulations still in the pipeline, it’s in the best interests of companies to keep working in ESG integration and reporting while keeping an eye on the legislative calendar so they can quickly adapt to further changes.