Sustainability & Legislation Series - Chapter 5: The EU Omnibus

By Jesper Risa, Data Analyst, Humans Not Robots.

On the 16th of December, the final text of the first EU Omnibus was adopted by the European Parliament. This Omnibus was motivated by the recommendations of the highly influential “Draghi Report.” This report argues that the EU must aim to become more competitive in the international market. Some have criticised the Omnibus’s deregulatory nature as not in line with the Paris Agreement, while others argue that it has rewarded the laggards who did not invest in becoming CSRD compliant.

Despite this, many businesses will still breathe a sigh of relief, as this will likely mark the end of a period of great policy uncertainty. This does, however, bring significant changes to sustainability reporting within the EU, meaning there is plenty of legislation to catch up on!

EU Omnibus Package

The first EU Omnibus package proposes a range of changes to sustainability policy, including the CSRD, CSDDD, EU Taxonomy, and CBAM, with the aim of simplifying legislation. It consists of two directives:

• Postponement Directive – delaying the implementation of CSRD and CSDDD for undertakings not yet subject to reporting under the aforementioned regimes

• Amendment Directive – bringing changes to a number of EU sustainability legislations

The Postponement Directive was passed by the European Parliament with a large majority in April 2025, additionally introducing voluntary standards for SMEs not covered by existing legislation.

The Amendment Directive has proved more controversial. The centre-right EPP was turned away after presenting its demands for deregulation as a ‘take it or leave it’ type deal to their coalition partners. After partnering with the right and far-right of the European Parliament, however, the Amendment Directive has recently (as of the time of writing) been approved by the European Parliament.

These amendments will apply from 2027.

Changes to the Corporate Sustainability Reporting Directive (CSRD)

The CSRD sees some major changes. Previously, it would have applied to companies as small as 250 employees and €50 million in annual revenue from January 2026, and companies as small as 50 employees and €10 million in revenue from January 2027. It will now only apply to enterprises with over 1,000 employees and €450 million in revenue.

It has also changed the requirement for annual external reasonable assurance to limited assurance every five years. Value chain data requirements are now limited to covering only other companies in the CSRD scope and volunteering SMEs (VSME standard), and the intention to implement sector-specific standards has been removed.

CSRD Reporting for Non-EU Companies

The Omnibus also brings changes to CSRD reporting for non-EU companies operating within the EU. Previously, all companies with subsidiaries or branches within the union had to report if they had a turnover higher than €150 million within the EU over the last two financial years, were the parent of subsidiaries that are large undertakings or listed SMEs, or had branches with more than €40 million turnover in the last financial year. This has now changed, with the threshold increased to €450 million, and at least one branch or subsidiary making over €200 million annually for the last two years. There are also no employee thresholds for non-EU companies.

Changes to the Corporate Sustainability Due Diligence Directive (CSDDD)

The CSDDD was implemented to establish a corporate due diligence duty, requiring companies to address negative impacts of their operations on the environment and human rights. The CSDDD also applied to an undertaking’s supply chain, and companies would be obligated to terminate relationships with those found in breach of the CSDDD’s goals as a last resort response.

Companies would also be required to have a 1.5°C-based transition plan in place and implement this plan.

The implementation of the CSDDD would have started with large companies from 2027 (>1,000 employees and >€450 million in net turnover) before extending its scope. The Omnibus drastically scales this back. It first delays the deadline for transposition into national law from July 2027 to July 2028. It then further narrows the scope to undertakings with more than 5,000 employees or €1.5 billion in net turnover. The obligation to terminate contracts as a last resort response to non-compliance is removed, and information requested from undertakings with fewer than 500 employees is limited to the new VSME standards.

Penalty provisions and rules guaranteeing representative actions are removed, as well as civil liability for damage related to CSDDD non-compliance, which is now referred to national law for definition. Financial services are completely removed from the scope of the CSDDD.

Changes to the EU Taxonomy

The Omnibus has also brought changes to the EU Taxonomy.

The taxonomy, in force since 2020, provides definitions and rules around concepts used in EU sustainability legislation. It establishes definitions of environmentally sustainable activities, as well as a common methodology to determine how green a company is. This is done through six environmental objectives:

• Climate change mitigation

• Climate change adaptation

• Sustainable use and protection of water and marine resources

• Transition to a circular economy

• Pollution prevention and control

• Protection and restoration of biodiversity and ecosystems

It further defines a “Green Asset Ratio.” This is calculated as the proportion of a credit institution’s assets that finance and are invested in EU Taxonomy-aligned economic activities as a proportion of the total covered assets.

Furthermore, “do-no-significant-harm” criteria are outlined. This assesses whether a company’s activity significantly harms progress towards any of the six aforementioned environmental objectives.

The Omnibus reduces the number of data points required by the EU Taxonomy by approximately 70%. It introduces a financial materiality threshold and provides a two-year reporting delay option for financial institutions. Undertakings not mandated to comply are now allowed to voluntarily report under partial EU Taxonomy alignment.

There are additional simplifications to some “do-no-significant-harm” criteria for subjects such as pollution and chemical use. Companies not in the scope of the CSRD also no longer need to be included in the Green Asset Ratio denominator.

Additionally, the concept of ‘stakeholder’ has been redefined. Under the Omnibus, it now refers to workers, their representatives, and individuals whose communities are directly impacted by goods, services, and operations. This means it now only applies to those directly affected by operations.

Changes to the Carbon Border Adjustment Mechanism (CBAM)

The CBAM introduces new reporting and cost mechanisms to manage and control the carbon intensity of goods imported to the EU. Under the mechanism, importers buy certificates, which are then surrendered based on the amount of carbon imported. It originally featured two phases.

The CBAM’s transitional phase was to last from 2023–2026. During this initial period, it was limited to goods at high risk of carbon leakage. This included imports such as steel, electricity, cement, iron, aluminium, fertilisers, and hydrogen. While greenhouse gases from imports were to be reported, import certificates were not necessary.

Following this transitional period, the definitive regime would make the purchase and surrender of carbon certificates mandatory for importers.

The changes made to the CBAM are perhaps the least controversial of those introduced in the Omnibus. It introduces a new threshold of 50 tonnes of carbon annually per importer for CBAM goods. This means 90% of importers are now outside the scope of the mechanism. Despite this, it is still expected to cover approximately 99% of carbon imports.

It further includes simplifications to the reporting requirements and calculation of emissions related to imports. The Omnibus also introduces stricter rules aimed at preventing the circumvention of CBAM rules. The sale of certificates is delayed by a year, from the start of 2026 to 2027.

Many companies will have fallen entirely outside the scope of reporting after the EU Omnibus. While this will come as a relief to some, others will be disappointed, as many have put significant time and effort into becoming CSRD compliant. If you fall into this category, you should not despair. Sustainability measurement and reporting is as important as ever. Rather than seeing it as just another box-ticking exercise, consider it an opportunity to improve how you understand and operate your business. This can yield great results, both in terms of company reputation and in detecting inefficiencies!

Don't let regulatory uncertainty slow down your sustainability journey. If you need clarity on how the new EU Omnibus requirements impact your business, or want to ensure your reporting strategy remains compliant, we can help. Contact HNR today to discuss your specific needs and turn these legislative updates into a competitive advantage.