Omnibus Legislation: Key Insights and Implications for Businesses

Omnibus: Maintaining Climate Goals While Easing Administrative Burden for Businesses

The Budapest Declaration and the Omnibus Proposal are responses to concerns regarding business competitiveness. Specifically, the focus is on excessive and complex administrative requirements that could hinder Europe’s competitiveness against the U.S. and China. In his report on competitiveness, Mario Draghi advocated for the “simplification” of social and environmental regulations, voicing concerns about regulatory burdens, especially for SMEs. This term has raised concerns among sustainability and environmental protection advocates, fearing potential backslides in social and environmental legislations.

In November 2024, Ursula von der Leyen clarified that the Omnibus Bill aims to streamline regulations without weakening them. This initiative seeks to uphold climate goals while lightening the administrative load for businesses. According to Von der Leyen, the aim is to eliminate redundancies and make the implementation of regulations more efficient without compromising their substance. This distinction is crucial, as it shows that the Commission does not intend to simplify regulations at the expense of their effectiveness. However, it’s possible that pressure from certain stakeholders may affect this direction.

Moreover, the Omnibus legislation is not without its critics. Many large companies have opposed it, including 12 global corporations that signed a letter to the EU expressing concerns that revising sustainability regulations could undermine their ongoing efforts and investments. These companies argue that pioneering firms that have already invested heavily may be disadvantaged, and emphasize that regulatory predictability is crucial for planning future actions. They urge the Commission to provide clearer directives to assist with implementation.

What Might the Omnibus Package Include?

The exact contents of the Omnibus package are still undefined, but it is expected to lead to an harmonization of rules and procedures to reduce disparities in the requirements set by the EU. The proposal may also simplify compliance processes and communication with authorities through increased use of digital tools. It is also expected to consolidate or simplify reporting obligations to help businesses save time and focus on their core activities. A 25% reduction in reporting requirements is being considered, enabling companies to concentrate more on their core activities while maintaining adequate transparency.

A document from the European Commission on the Competitiveness Compass highlights several key adjustments in line with this approach:

• Adjustment of Deadlines: The Commission will ensure that “deadlines are proportionate” to facilitate deployment.
• Content Focus: The Commission will ensure that the required data aligns closely with investors’ needs, emphasizing the most harmful activities.
• New Category for Small-Medium Sized Enterprises (SMEs): The Commission proposes easing reporting requirements for 31,000 SMEs.
• Simplifications in the Value Chain: Suppliers integrated into the value chain may benefit from relaxed reporting and compliance requirements.

How Does the CSRD Remain a Pillar for Sustainable Transformation?

Often seen merely as a reporting obligation, the CSRD is in fact a fundamental pillar of corporate sustainable transformation. Sustainability reporting is an essential step toward improving corporate transparency and demonstrating efforts in sustainability. It also acts as a strategic guide for advancing business model transformations and developing new competitiveness models. The CSRD should be viewed as a tool for profound transformation rather than a mere administrative requirement.