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 does the Omnibus proposal contain?

Proposed changes to the CSRD

Reporting scope: The threshold would be raised to include only companies with more than 1,000 employees and €50 million in revenue or a balance sheet exceeding €25 million. This would reduce by 80% the number of companies subject to the CSRD.

Two-year delay for the second wave: The European Commission proposes a two-year delay for the reporting obligation for companies outside the proposed scope. If the proposed change to the scope is approved, companies with fewer than 1,000 employees would be completely excluded from the application.

Value chain limit: Companies with fewer than 1,000 employees, excluded from the CSRD, would be able to follow a voluntary reporting standard based on EFRAG’s VSME. This standard will serve as protection by limiting the information large companies and banks subject to the CSRD can request from them.

Removal of sectoral standards: The Commission will no longer have the power to adopt sector-specific ESRS standards.

Removal of reasonable assurance requirements: The Commission will no longer have the ability to propose moving from a limited assurance requirement to a reasonable assurance requirement.

Reduction in the number of data points: The Commission will revise the European sustainability reporting standards (ESRS) to reduce the number of data points and clarify certain provisions.