Europe simplifies its ESG regulatory frameworks, what to know about the Omnibus directive

In its Budapest declaration in November 2024, the EU Council called for a 'revolution in terms of simplification'. German Chancellor Olaf Scholz also called for the simplification of the CSRD in a letter to European Commission President, Ursula von der Leyen, reigniting the debate on these issues in early 2025.

On November 8, 2024, the Council of the European Union, an institution made up of the heads of state and government of the EU member states, made 12 recommendations aimed particularly at improving EU competitiveness (link). These are based, among other things, on the reports 'Much more than a market' (Enrico Letta) and 'The future of European competitiveness' (Mario Draghi).

It was the 4th proposal that caught the attention of regulatory reporting stakeholders:

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"Launching a simplification revolution, ensuring a clear, simple, and smart regulatory framework for businesses and drastically reducing administrative, regulatory and reporting burdens, particularly for SMEs. We must adopt an enabling mindset based on trust, allowing businesses to flourish without excessive regulation. Key objectives to be implemented by the Commission without delay include making concrete proposals on reducing reporting requirements by at least 25% in the first half of 2025, and including red-tape and competitiveness impact assessments in its proposals."

Following these statements, Ursula Von der Leyen proposed an Omnibus legislation aimed particularly at consolidating and simplifying the CSRD, the Taxonomy regulation, and the CS3D. A proposal from the European Commission is set to be published on February 26, 2025.

In the context of European legislation, an "omnibus" directive is a legislative initiative that consolidates multiple amendments or revisions of existing texts into a single proposal. Depending on whether it is a directive or a regulation, the adoption process differs:

• Omnibus regulation: Modifies existing regulations. Adopted by the European Council (and potentially the Parliament) or by the European Commission, it applies directly in the legal framework of Member States without requiring transposition
• Omnibus directive: Modifies existing directives. The adoption process is similar to that of standard directives, involving readings by European institutions (Council, Parliament, Commission), which may result in several back-and-forth exchanges. The proposal can be rejected at any stage of the procedure, and once adopted, it must be transposed into national law by the Member States

Since the CSRD (Corporate Sustainability Reporting Directive) and the CSDDD (Corporate Sustainability Due Diligence Directive) are European directives, their modification must be carried out through an omnibus directive. This is the purpose of the proposal presented on February 26, 2025. The delegated regulations accompanying the CSRD, which notably detail the ESRS (European Sustainability Reporting Standards), could theoretically be amended by regulation, without requiring transposition by the Member States.

The omnibus directive is a regulatory tool already used by the European Union. For example, Directive (EU) 2019/2161, adopted at the end of 2019, aimed to modernize EU rules on consumer protection.

At Greenscope, we fully support the idea that environmental regulations, such as the CSRD, should drive a profound transformation of economic activities. However, we also recognize that the various European directives and regulations adopted since 2019 as part of the Green Deal can place a significant workload on European companies.

There are numerous operational challenges: the large volume of data to be reported and the drafting of narrative sections represent a real administrative burden for teams responsible for implementing the CSRD. Critics of the CSRD and CSDDD argue that these obligations result in high compliance costs, impacting the competitiveness of European businesses—especially listed SMEs and mid-sized companies.

As a result, calls for simplification have emerged, suggesting a prioritization of climate objectives within the CSRD or an increase in the applicability thresholds of these directives.

The Omnibus Directive, presented on February 26, 2025, introduces several amendments aimed at simplifying sustainability reporting obligations for European companies. The key changes include:

👉 For the CSRD

• Postponement of application: Companies initially required to comply in 2026 will now have until 2028
• Retention of double materiality: The EU maintains its leadership by keeping this strategic exercise mandatory, a practice already adopted by other countries, including China
• Revision of eligibility thresholds: Only companies with more than 1,000 employees and either a turnover exceeding €50 million or a balance sheet above €25 million will be subject to the CSRD. Smaller companies can opt for a voluntary standard (VSME)
• Limitation of data collection requirements: Companies will no longer be required to collect data from suppliers not subject to the CSRD
• Elimination of sector-specific standards: The initially planned sectoral standards have been removed
• Overhaul of ESRS (European Sustainability Reporting Standards): A review of the 12 covered topics is planned, likely leading to a reduction in the number of required data points

👉 For the CS3D

• Limited due diligence obligations: Companies will only be required to oversee direct partners, excluding the entire value chain
• Reporting frequency: Evaluations will be conducted every five years, instead of the previous annual requirement
• Financial penalties: The proportionality of sanctions based on turnover is removed. However, Member States may still impose penalties, with further recommendations from the European Commission expected regarding fine amounts
• Transition plans: Their adoption remains recommended but is no longer mandatory

It is important to note that this European Commission publication is a proposal that still requires approval before becoming applicable.

Additionally, a public consultation is open from February 26 to March 26, 2025, regarding proposed amendments to delegated acts associated with the Taxonomy Regulation. The key points include:

• Reduction of reporting templates: A 70% decrease in required templates and the introduction of a financial materiality threshold
• Exemptions for certain companies: Under specific conditions, non-financial companies may be exempt from reporting operational expenditure (OPEX) indicators
• Modification of key performance indicator (KPI) calculations: Non-financial companies with fewer than 1,000 employees will be excluded from KPI calculations

The Omnibus Directive once again highlights the continuous evolution of the European regulatory framework for ESG reporting. In this context, anticipation and regulatory monitoring are essential for companies aiming to comply with new requirements without disrupting their operations.

At Greenscope, we support our clients by providing in-depth expertise and continuous monitoring of legislative and regulatory developments. Our mission is to help businesses interpret these changes, assess their impact, and adjust their reporting strategies accordingly.

However, these regulatory adjustments should not overshadow the core objective: effectively managing ESG performance. The simplification of certain obligations does not exempt companies from the need to structure and ensure the reliability of their sustainability data. A proactive approach not only meets transparency requirements but also turns compliance challenges into performance drivers.

It is therefore crucial to enhance the quality of ESG data—its reliability, traceability, and standardization are key elements to ensure compliance, facilitate audits, and strengthen corporate credibility with investors and stakeholders. More than just a regulatory obligation, ESG reporting is a strategic necessity.

Anticipating, adapting, and structuring ESG reporting with a long-term vision—this is how Greenscope helps businesses navigate these evolving regulations.

11/08/2024: Budapest Declaration (source).

11/27/2024: Ursula von der Leyen proposes Omnibus legislation (source).

01/06/2025: German Chancellor Olaf Scholz calls for simplifying the regulatory framework (source).

01/20/2025: Stéphane Séjourné announces the abolition of the CSRD (source).

01/21/2025: Stéphane Séjourné's claims are refuted (source).

01/23/2025: Éric Lombard announces the suspension of the CS3D directive (source).

02/11/2025: Publication of the European Commission's work program for 2025 (source).

02/26/2025: Publication of the Omnibus Directive on CSRD and CSDDD (source)

Coming up:

Consultation Phase (February 26 – March 26, 2025): Public consultation on proposed amendments to the Taxonomy Regulation

Revision of ESRS: Overhaul of the European Sustainability Reporting Standards

Start of the Legislative Process: Implementation of proposed changes through the legislative approval cycle