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🔎 Key takeaways
The European Commission unveiled its first Omnibus legislative proposalon Wednesday, February 26. The stated goal? To simplify certain key European Green Deal regulations, which are often criticized for their administrative complexity and viewed by some political and economic stakeholders as a barrier to the competitiveness of European companies on the international stage.
This first text (the first in a series of three planned for 2025) specifically targets four pillars of the Green Deal: the CSRD directive on sustainability reporting, the CSDDD directive on corporate due diligence, the EU taxonomy and the CBAM, the European carbon border adjustment mechanism.
In this article, we analyze the main developments that companies should expect.
However, it is important to keep in mind that this is currently only a draft directive and may therefore change during its legislative journey.
What does the Omnibus directive say about the CSRD?
While thedouble materiality assessment that was at the heart of many questions was ultimately not called into question by the European Commission, the Omnibus directive proposes numerous changes in terms of timelines, application thresholds, and the amount of data reported. Need help with your CSRD reporting? Discover Tennaxia's CSRD software .
A. New application thresholds
The first key takeaway is that the European Commission intends to significantly reduce the number of companies impacted by the CSRD. It would align the thresholds with those applicable to the CS3D, thereby reducing the number of companies subject to this annual sustainability reporting obligation by 80%. Consequently, only companies with more than 1,000 employees and generating a turnover of at least 50 million euros or a balance sheet total of at least 25 million euros would be affected.
This new threshold would exclude from the CSRD some of the first-wave companies that published their first report this year based on 2024 data (likely starting from 2027), as well as companies in subsequent waves. Listed SMEs would therefore also be excluded from the scope of the CSRD.
Regarding non-European companies, the thresholds would also change. Only those with more than 1,000 employees and generating a turnover of at least 450 million euros (compared to 150 million euros today) would be affected.
B. A postponement of reporting obligations
While awaiting the legislative process to formalize these proposals, the Commission has suggested a "stop the clock" approach. This would involve postponing the obligations for second and third-wave companies by two years.
Companies originally scheduled to report for the first time in 2026 on 2025 data would now publish in 2028 on 2027 data. Third-wave companies initially required to publish their sustainability report in 2027 on 2026 data would see this obligation pushed back to 2029 on 2028 fiscal year data. However, since the third wave consists of listed SMEs, it is highly likely that these companies will ultimately not be subject to the CSRD once the Omnibus legislative process is complete.
C. A voluntary standard based on the VSME
The Commission also plans to adopt a voluntary standard for companies that now fall outside the CSRD application thresholds. This standard, to be published via a delegated act, is expected to be heavily inspired by the VSME standard already published by EFRAG, which targets SMEs. It is a simplified version of the CSRD that the European Commission considers better suited to these types of organizations.
D. A reduction in data requirements for the CSRD
Regarding the number of data points required in CSRD reports, companies still subject to the standard would see the number reduced by approximately 70%. A request has been issued to EFRAG to better target data points across the various ESRS and thereby reduce their quantity. It is highly likely that narrative disclosures will be the first to be affected by these changes.
The sector-specific standards currently being developed by EFRAG, which were scheduled for release in June 2026, have been abandoned.
E. A complete overhaul of CSRD audit processes
In response to numerous complaints from companies regarding the costs of auditing CSRD reports, the Commission has proposed in this draft law to remain at a limited assurance level. The transition to reasonable assurance, which was set to begin in 2028, has therefore been abandoned.
The European Commission plans to publish guidelines by 2026, rather than a standard, on the procedures for auditing sustainability reports.
F. A “value chain cap” to protect SMEs
Continuing with the goal of administrative simplification for SMEs, the European Commission intends to implement a “value chain cap”. The purpose of this system is to limit the amount of data that large corporations can request from SMEs within the scope of their client-supplier relationships. The underlying objective is to ensure that SMEs are not forced to meet the same reporting standards as large corporations through a trickle-down effect.
A framework based on the VSME will serve as the standard for information that can be requested from companies with fewer than 1,000 employees that are part of the value chain.
How does the Omnibus law impact the CSDDD?
The Omnibus directive also proposes significant changes to corporate obligations under the European Corporate Sustainability Due Diligence Directive, which was initially scheduled to enter into force gradually between 2027 and 2029.
A. A delay in the implementation of the CSDDD
The transposition of the directive into the national laws of EU member states was originally required by July 26, 2026. The Omnibus proposal suggests extending this transposition deadline by one year to allow for the integration of changes related to this new law.
This also implies a postponement of the CSDDD’s entry into force until 2028. The first and second waves of affected companies are now expected to be subject to these requirements simultaneously starting in 2028, rather than 2027 as originally planned for the first wave.
B. A reduction in the scope of due diligence
The European Commission proposes narrowing the scope considered in risk assessments.
While companies were initially required to exercise due diligence regarding human rights and environmental protection across their entire value chain, following the amendment, this duty would apply only to direct business partners except in cases where there is plausible information suggesting negative impacts beyond the first tier of the value chain.
The Commission also suggests limiting or reducing mandatory stakeholder engagement at certain stages of the due diligence process.
C. Simplified content
Companies will be able to request the information necessary to fulfill their obligations from their suppliers. However, if those suppliers have fewer than 500 employees, the information provided must be based on the future VSME standard. As with the CSRD amendment, the goal is to limit the obligations that SMEs might face due to the trickle-down effect. It remains possible, however, to request additional information on a topic if it is not covered by the VSME.
Regarding the establishment of a dialogue with various stakeholders, the Commission suggests limiting the definition of stakeholders to workers, subsidiaries, business partners, and affected individuals and communities. This excludes consumers as well as human rights or environmental advocacy organizations.
D. A less frequent monitoring cycle
Assessments of suppliers and the effectiveness of the due diligence system would be conducted every 5 years, instead of annually as originally planned.
E. A less stringent environmental transition plan
In its initial version, the CSDDD required companies to develop and implement an environmental transition plan aligned with the goals set out in the Paris Agreement.
The Omnibus Directive does not remove the obligation to establish a transition plan, but it makes its implementation voluntary.
F. A more flexible sanctions system
The company's civil liability would no longer be engaged in the event of actual environmental damage or proven human rights violations within its value chain.
The Commission also proposes to break the link between financial penalties and the company's turnover, effectively removing the 5% turnover cap initially provided for in the directive.
Finally, in the event of proven damage, terminating the business relationship with the supplier as a last resort would be replaced by a temporary suspension.
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What are the consequences of the Omnibus law for the Green Taxonomy?
The European taxonomy would also undergo some changes.
As a reminder, this directive aims to provide consistent and comparable information to investors and financiers. The idea is to redirect financial flows toward activities considered green under this taxonomy.
A. New application thresholds
Initially, the taxonomy's application thresholds corresponded to those of the CSRD. The Commission proposes establishing a new threshold decoupled from the CSRD. This would apply to companies with more than 1,000 employees and generating a turnover exceeding 450 million euros.
The process will be voluntary for companies below these thresholds.
B. Simplification of content to be published
The Commission aims for a 70% reduction in the information to be published as part of the taxonomy report. It has notably launched a public consultation to allow companies to provide feedback on the report's format and content.
It may also become possible to publish information on activities that are not yet aligned but are on track to be (i.e., partially aligned).
OpEx should no longer be required as part of the taxonomy reporting. Companies will still be able to provide them on a voluntary basis. The analysis will therefore focus on turnover and CapEx.
The scope of activities to be considered could also change by excluding non-material activities (i.e., those representing less than 10% of turnover, CapEx, or OpEx).
C. A revision of the DNSH criteria
To be aligned with the taxonomy, companies must prove that they do not have a negative impact on the green taxonomy's objectives; this is the DNSH (Do No Significant Harm) principle.
As the objective regarding "pollution prevention and control" was deemed too complex and burdensome for many companies, the Commission launched a second public consultation aimed at simplifying the associated criteria.
D. A new method for calculating the GAR
Financial companies were initially required to publish information on all companies within their portfolio to calculate their GAR (Green Asset Ratio), which corresponds to the share of taxonomy-aligned sustainable investments relative to their total investments.
The Omnibus directive suggests only taking into account companies subject to the CSRD in this calculation.
What changes have been made to the CBAM in the Omnibus law?
The CBAM (Carbon Border Adjustment Mechanism) will also be impacted by the Omnibus directive. This mechanism aims to tax imports of high-CO2 emitting products into the European Union to prevent carbon leakage and encourage industrial decarbonization.
A. A new application threshold
The Omnibus directive proposes applying the tax only to companies importing a minimum of 50 tonnes of products per year. This threshold will exempt 90% of importers from the carbon tax.
Previously, this threshold was set at €150 worth of imports. The Commission deemed this insufficient to exclude occasional importers of small quantities from the scope of the CBAM, as they face an overly heavy administrative burden. It also concluded that monetary value was not an appropriate indicator for a mechanism targeting the intrinsic emissions of goods.
However, despite this new threshold, The Commission states that the tax would still cover 99% of emissions from the sectors subject to this mechanism: steel, cement, aluminum, nitrogen fertilizers, and hydrogen.
The Commission's proposal also provides greater flexibility for importers near the 50-tonne mass threshold for imported CBAM goods. They may register as an "occasional importer" but can request "CBAM declarant" status at any time if they anticipate exceeding the 50-tonne threshold.
B. A strengthened control system
The proposal provides for a new, more robust control mechanism based on customs data obtained from the European surveillance system. The Commission and national competent authorities are jointly responsible for monitoring occasional importers and those who exceed the established threshold.
If the threshold is exceeded, the Commission will alert the national customs authority, which may block the relevant imports. Occasional importers without prior authorization would thus face a penalty and would need to obtain authorized declarant status to continue their operations.
This mechanism aims to prevent the circumvention of rules, particularly through the artificial splitting of shipments.
C. Simplification of declarant authorization
The measures proposed by the Commission aim to simplify declarant authorization in two ways:
- Optional consultation: National competent authorities (NCAs) can now choose whether consultation with other NCAs or the Commission is necessary, whereas it was previously mandatory. The goal is to accelerate the authorization process.
- Introduction of a CBAM representative: CBAM importers and declarants may delegate the submission of their declarations to a third party. This delegation does not exempt them from their obligations but allows them to reduce costs and administrative burden.
D. Simplification of the emissions calculation method
The Commission has proposed a set of measures to simplify the method for calculating GHG emissions for products subject to CBAM.
- Exclusion of non-calcined clay : Removal of non-calcined kaolinic clay from the scope of CBAM, as it is low-carbon and therefore generates unnecessary administrative burden.
- Use of default values for indirect emissions : Removal of the Commission's ability to adopt implementing acts regarding the emissions calculation method after the transitional period, avoiding complex proof and assessment procedures.
- Embedded emissions data : Adoption of a realistic approach based on actual or best available data to overcome collection challenges in third countries.
- Alternative default values : Setting reference values based on the least efficient installations to avoid favoring countries lacking reliable data.
- Emissions calculation for aluminum and steel : Exclusion of final production processes, simplifying emissions reporting for these sectors.
- Exemption for precursors produced in the EU : Assigning zero embedded emissions to precursors (CBAM products used as raw materials in the production of other CBAM products) already subject to the ETS, avoiding double counting.
- Emissions verification : Removal of verification requirements for default values to reduce unnecessary costs.
- Exclusion of indirect electricity emissions : Clarification that only direct emissions are considered for electricity, as the system targets producers, not consumers.
E. Simplified reporting requirements
Reporting requirements would also be simplified through two main measures.
The deadline for submitting annual CBAM declarations will be adjusted: declarations and certificate surrenders must be completed by August 31, their redemption by September 30, and certificate cancellation will take place on October 1.
Access to the CBAM registry is improved by facilitating access for third-country operators and creating specific access for accredited verifiers.
F. Simplified financial requirements
The Commission's text aims to simplify the management of CBAM certificates by easing obligations for declarants. The rule requiring the redemption of certificates covering 80% of emissions at the end of each quarter is lowered to 50%. Filers will also have more flexibility in choosing their calculation method and will see the certificate buyback limit adjusted.
Finally, the start date for the sale of certificates has been set for 2027, instead of the initial January 1, 2026.
What is the legislative path for this Omnibus law?
The European Commission has indicated that it is proceeding with a "level 1" reopening of these key texts of the European Green Deal, meaning a comprehensive renegotiation of this legislation by the co-legislators: the European Parliament, the Council of Europe, and the European Commission.
This implies that the validation process for this law will almost certainly be quite long, given the numerous disagreements between countries and parties regarding these texts. Nevertheless, the Commission has requested a "fast track" process to accelerate discussions, which could facilitate adoption by autumn 2025.
It should be noted, however, that the draft law may be significantly amended throughout its legislative journey to secure a majority among the various European legislators.
Regarding the CSRD, pending the amendments to the various texts, the current rules of the directive still apply in the 20 European countries where it has been transposed into national law. The legislative process is expected to take several months, and EU member states will then have one year to transpose these changes into their national law.
Therefore, for the time being, "first wave" companies that published this year, as well as "second wave" companies (those subject to the CSRD for the first time in 2026 based on 2025 data), must still consider the initial text to be applicable.