The European Commission has proposed a comprehensive program to adapt and simplify sustainability regulations, called Omnibus. The aim is to strengthen the EU's competitiveness and reduce the administrative burden on companies. The changes include the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the Carbon Border Adjustment Mechanism (CBAM) and the InvestEU Regulation.
Background and objectives of the Omnibus program
With the introduction of the Competitiveness Compass, the European Commission has created a strategic framework to sustainably strengthen and secure the EU's competitiveness in the long term. The concept was developed in close alignment with the recommendations of the Draghi report, which proposes comprehensive reforms to improve the EU's competitiveness. In addition, it is based on the results of a detailed needs analysis carried out by the Commission in 2023, which identified significant weaknesses and excessive regulatory burdens.
A key objective is to simplify existing regulations in a targeted manner and thus significantly reduce the administrative burden on companies. The aim is to reduce the general bureaucratic burden by at least 25 percent. Small and medium-sized enterprises (SMEs) in particular are to benefit from an even more comprehensive simplification by reducing their administrative burden by at least 35%.
These measures are intended to strengthen the European economy as a whole and create an investment-friendly environment. This includes the reduction of duplicate reporting obligations, the simplification of regulatory requirements and better harmonization of existing regulations with international standards. Ultimately, this should help to provide European companies with more efficient market access and at the same time reduce administrative hurdles that have hindered growth and innovation to date.
Corporate Sustainability Reporting Directive (CSRD) is adapted by Omnibus
The Corporate Sustainability Reporting Directive (CSRD) is a key component of EU sustainability legislation and has undergone significant changes as a result of the omnibus program. The aim of these amendments is in particular to simplify reporting obligations and reduce the bureaucratic burden on companies.
One of the most important changes concerns the increase in the threshold values for the reporting obligation. In future, only companies with more than 1,000 employees and either a turnover of more than 50 million euros or a balance sheet total of more than 25 million euros will be obliged to report on sustainability. This new regulation significantly reduces the number of companies affected - around 80 percent of the companies previously required to report will be released from the scope of the CSR Directive. This will significantly reduce the burden on SMEs, which were previously disproportionately affected by bureaucratic requirements.
In addition, companies that are no longer required to report are given the opportunity to report voluntarily in accordance with a standardized, simplified reporting system. This is an option for companies that want to continue to maintain transparency towards their stakeholders, but without the full regulatory burden of the CSRD.
Another key aspect of the reform is the abolition of sector-specific reporting obligations. This means that companies no longer have to fulfill additional sector-specific reporting requirements. This measure helps to improve the consistency and comparability of sustainability reports and at the same time relieves companies of unnecessary bureaucracy.
In addition, the planned introduction of a "reasonable assurance" audit has been deleted without replacement. The originally planned tightening of audit obligations would have resulted in high costs, particularly for smaller companies. Instead, a "limited assurance" audit has been retained.
The reporting obligations for small and medium-sized enterprises (SMEs) will also be postponed by two years. This will give these companies more time to prepare for the new requirements and adapt their internal processes accordingly.
Changes to the Corporate Sustainability Due Diligence Directive (CSDDD)
The Corporate Sustainability Due Diligence Directive (CSDDD) provides for comprehensive changes to enable companies to implement due diligence obligations in a more practicable manner and at the same time reduce the regulatory burden. One of the key changes concerns the extension of the implementation deadline. Companies now have one year longer, until July 2028, to implement the new due diligence obligations. This is intended to ensure that all affected stakeholders have sufficient time to adapt their internal processes and minimize regulatory uncertainties.
Another important point is the reduction in auditing obligations for indirect suppliers. In future, companies will only be obliged to carry out an in-depth audit if there are plausible indications of human rights or environmental violations. This represents a considerable relief, particularly for companies with widely ramified supply chains, as they no longer have to check every stage of their value chain in detail. Instead, the due diligence obligation focuses on direct business partners, unless there are reasonable grounds for suspicion.
The frequency of reporting on the effectiveness of the measures taken has also been revised. Instead of an annual review, companies now only have to evaluate and adjust their due diligence obligations every five years. This change significantly reduces the administrative burden and allows companies to focus on more strategically important sustainability measures.
In addition, civil liability in connection with the CSDDD will be more closely aligned with the existing national legal systems of the Member States. This measure allows for a more flexible implementation within the EU, taking into account the national legal frameworks. At the same time, the need for binding regulations at EU level in this area will be reduced.
Finally, the obligation to involve stakeholders is simplified and more clearly defined. Companies must still coordinate with relevant stakeholders. However, this process will be streamlined in order to avoid inefficient and unnecessarily complex procedures. The revised regulations are intended to ensure that stakeholder engagement remains feasible in practice and that companies are not burdened by disproportionate requirements.
Facilitation of the Carbon Border Adjustment Mechanism (CBAM)
The Carbon Border Adjustment Mechanism (CBAM) is a key EU instrument for combating carbon leakage by introducing a carbon price for certain energy-intensive products from third countries. The aim is to ensure fair competitive conditions for European companies and prevent production from being relocated abroad solely due to lower environmental standards.
One of the main adjustments made by Omnibus concerns the introduction of relief for small importers. Companies that import less than 50 tons of goods subject to CBAM per year will be exempt from reporting obligations in future. This is intended to relieve the burden on small and medium-sized companies in particular, which would otherwise have a disproportionately high bureaucratic burden.
In addition, the calculation procedure for the companies concerned will be significantly simplified. Instead of having to prove complex emission values for imported goods, companies can use standardized values and average values to calculate their levies. This significantly reduces the administrative burden and makes it easier to comply with the CBAM requirements.
Another important aspect of the reform is the strengthening of the anti-abuse regulations. In the past, circumvention strategies were observed in which companies, for example, diverted goods to third countries or used alternative production routes to avoid CBAM duties. Increased control mechanisms and improved cooperation with international trading partners should prevent such practices in the future.
Reduction of the administrative burden for InvestEU
The InvestEU Regulation was revised with the aim of making capital mobilization within the European Union more efficient and facilitating access to financing instruments, particularly for small and medium-sized enterprises (SMEs) and innovative projects. The changes made by Omnibus focus in particular on reducing administrative hurdles and simplifying reporting obligations.
A key aspect of the reform is the reduction of the administrative burden for financial intermediaries and final beneficiaries of InvestEU funds. The frequency of reporting has been reduced so that companies can focus more on their economic activities. In addition, small companies are better taken into account through a more flexible definition of SMEs, giving more companies access to InvestEU funding programs.
The planned financial relief is particularly noteworthy: the savings from the simplifications amount to around 350 million euros. In addition, the revised measures are expected to release an additional investment volume of up to 50 billion euros. These funds are to flow into future areas such as digitalization, clean technologies and sustainable infrastructure projects in order to promote long-term economic growth and innovation.
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Effects and benefits for companies through Omnibus
The measures envisaged in Omnibus will bring considerable benefits for companies in the European Union. By simplifying reporting obligations under the Corporate Sustainability Reporting Directive (CSRD), companies are expected to save around 4.4 billion euros annually. These cost savings will allow companies to use their financial and human resources more efficiently and focus more on their core activities.
For SMEs and mid-sized companies, numerous bureaucratic hurdles that previously impaired their competitiveness will also be removed. Particularly noteworthy is the exemption of small companies from reporting obligations, which leads to a considerable reduction in administrative burdens. This not only reduces internal costs, but also strengthens the innovation potential and economic agility of these companies. Large companies also benefit from the streamlining of reporting structures, as the requirements for sustainability reporting have been made clearer and more practicable.
In addition, the reform of the Corporate Sustainability Due Diligence Directive (CSDDD) ensures a more balanced regulation of corporate due diligence obligations. Companies now only have to carry out in-depth audits if there are plausible indications of violations in their supply chains. This represents a significant simplification and avoids unnecessary bureaucracy, which has previously been a particular burden for companies with complex international value chains.
The changes to the Carbon Border Adjustment Mechanism (CBAM) also contribute to fairer and more transparent market regulation. Small importers will be relieved by the introduction of minimum limits, while at the same time ensuring that environmentally harmful relocation of production is avoided. This means that both European producers and importers will benefit from clearer and fairer regulation.
Overall, the reforms should lead to greater relief for the European economy without jeopardizing the EU's overarching sustainability goals. The combination of administrative simplification, improved framework conditions for SMEs and targeted promotion of sustainable investments should strengthen the competitiveness of European companies and contribute to a more resilient economic system in the long term.
Source: Press release of the European Commission on the Omnibus program
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