Navigating the evolving EU ESG landscape: Understanding the Omnibus package and its potential impact 

The European Commission’s recent unveiling of the Omnibus package on 26th February 2025 has initiated a new phase in the evolution of the EU’s ESG regulatory landscape. This package proposes significant adjustments to key regulations, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy, and the Carbon Border Adjustment Mechanism (CBAM). 

At Nexio Projects, we recognise that navigating such regulatory shifts requires a nuanced understanding of the implications and a proactive approach to adaptation. Our focus is on empowering businesses to not only comply with evolving requirements, but also to leverage sustainable practices for long-term value creation. 

Background and context 

The EU Omnibus proposal, unveiled in February 2025, represents a pivotal attempt to streamline sustainability regulations amidst mounting pressures from businesses and member states. Building on the Draghi Report and the Competitiveness Compass report published by the EU commission, which emphasised reducing regulatory barriers to bolster European innovation and economic resilience, the proposal seeks to simplify key frameworks like CSRD, CSDDD, CBAM and EU Taxonomy. This initiative responds to calls from countries like Germany and France for delays and scope reductions in reporting requirements, citing economic competitiveness concerns. However, it has sparked significant pushback from institutional investors who warn that these revisions risk undermining legal certainty, weakening sustainability disclosures, and jeopardising long-term investment aligned with the European Green Deal. Similar pushback has also been received from big corporates who have already invested significant time and resources to comply with the aforesaid legislations.  

What’s changing? Key updates from the Omnibus package

The stated aim of the Omnibus package is simplification, but it’s essential to understand the specific changes being proposed and how they might affect your business. Here’s a breakdown of the most significant updates: 

• CSRD scope reduction: A central proposal is to significantly reduce the scope of CSRD. 

• Companies with fewer than 1000 employees have been proposed to be excluded from CSRD requirements, aligning with the CSDDD requriements 

• These companies may use voluntary reporting standards, to be formulated based on existing Voluntary Standard for non-listed micro-, small- and medium-sized undertakings (“VSME”).  

• Listed SME’s have also been excluded from the scope fo CSRD 

• For companies which are not in the Scope of CSRD, the requirements to supply the value chain information have also been proposed to be reationalised 

It’s been suggested that this shift presents smaller companies with an opportunity to strategically engage with sustainability reporting on a voluntary basis, giving them a competitive advantage. On the other hand, some believe this exclusion poses a risk of reduced transparency across certain value chains, thus impacting more robust sustainability efforts. 

• Deferred application: Reporting requirements for companies in the second waves of CSRD (filing in 2026) has been proposed to be deferred by two years (if they remain in scope under the new thresholds).  

There is sentiment that this deferral provides companies with valuable time to better refine sustainability strategies, data collection, and reporting procedures. Yet, there’s also a school of thought that delaying implementation could potentially slow down the progress on broader ESG goals and create uncertainty for those businesses already invested in CSRD compliance. 

• ESRS simplification: The number of data points required under the European Sustainability Reporting Standards (ESRS) is expected to be reduced by up to 25%, with a greater emphasis on quantitative data.  

It’s been put forward that this eases the reporting burden and calls for a more focused approach to identifying and reporting on the most material ESG factors. It has also been suggested that this reduction in data points could risk oversimplifying sustainability issues and might reduce the amount of information available to investors and other stakeholders. 

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Key changes to EU Taxonomy Proposals 

• Alignment on thresholds with the updated CSRD threshold, with the opt-ins also allowed for companies with lower than Euro 450 million in turnover ; 

• Simplification of reporting templates; and  

• Setting up of materiality threshold to 10% of capital expenditure, operating expenditure, turnover or total assets, as relevant;  

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Understanding the legislative process 

 The Omnibus proposal comprises three distinct components, each with its own legislative pathway and timeline: 

1. Core Legislative Amendments: This element involves substantial changes to key regulations such as the CSRD, CSDDD, and CBAM at the primary legislative level (Level 1). The process for these amendments is comprehensive, requiring tripartite negotiations between the European Commission, Council, and Parliament. Given the proposal’s deregulatory nature rather than mere simplification, significant opposition is anticipated. Consequently, a final decision on these core changes is unlikely before the end of the year. 

2. Delegated Acts and ESRS Simplification: The second component focuses on modifying the EU Taxonomy’s delegated acts and simplifying the European Sustainability Reporting Standards (ESRS) at the secondary legislative level (Level 2). This process is comparatively streamlined, allowing for objections to the proposal but generally moving faster. We anticipate this element to be concluded within the next six months. 

3. Reporting Deferral: The final element proposes a two-year postponement of CSRD and Taxonomy reporting requirements. The European Commission has requested fast-tracking for this component to provide certainty to in-scope companies and allow the European Parliament ample time to deliberate on the Level 1 changes. This deferral is expected to be confirmed relatively quickly, likely within one to two months. 

Recommended actions

Charting a course through uncertainty – and toward opportunity. 

As the regulatory landscape continues to evolve, a proactive and strategic approach is more crucial than ever. Businesses must not only understand the proposed changes but also assess their potential impact and seize the opportunities they present. 

• Stay informed and evaluate implications: Monitor the legislative progress of the Omnibus package closely. Assess how the revised thresholds might apply to your group—especially for reporting obligations extending to 2029. Consult advisors or auditors to navigate potential interpretational challenges, such as consolidation requirements and employee definitions. Consider how the proposed changes will affect your company’s reporting duties, value chain considerations, and overall sustainability strategy. 

• Prioritise key ESG areas: If your business is unlikely to fall under the new scope, strategically prioritise your Corporate Sustainability Reporting Directive (CSRD) journey. Focus on overlapping ESG elements, including: 

• Industry-agnostic priorities: Double materiality, climate impact, and governance. 

• Industry-specific factors: Employee-related disclosures, pollution metrics, and sector-specific sustainability considerations.Taking this approach ensures preparedness, even if the Omnibus proposal is not enacted as anticipated. 
• Strengthen sustainability strategy: Regardless of regulatory simplifications, maintaining a strong sustainability strategy is essential. Use your CSRD journey to develop a comprehensive sustainability management system that supports: 

• Voluntary reporting and alignment with frameworks such as GRI, TCFD, and TNFD. 

• Mandatory reporting in jurisdictions following IFRS standards (e.g., UK, California, Canada, China). 

• Sustainability ratings such as EcoVadis and B-Corp. 
• Enhance data collection & reporting: Leverage any potential deferral or simplification of reporting requirements as an opportunity to refine your ESG data collection and reporting systems. Strengthen your processes for tracking, measuring, and ensuring the quality and transparency of key ESG metrics. 

• Engage with key stakeholders: Actively engage with customers, investors, and other stakeholders to understand their ESG information needs. Even under the Omnibus proposal, businesses will need to disclose relevant sustainability data to value chain partners per VSME standards. Additionally, involve top management and the Board to align ESG initiatives with corporate strategy and long-term ambitions. 

By adopting a structured and forward-looking approach, businesses can navigate regulatory uncertainty while reinforcing their commitment to sustainability and long-term value creation. 

Nexio Projects: Your partner in navigating the ESG evolution 

At Nexio Projects, we understand that navigating the changing landscape of ESG regulations, particularly with the introduction of the Omnibus Package, can be complex. We offer a range of services to support businesses in this journey, from conducting materiality assessments and developing robust sustainability strategies to implementing data collection and reporting systems that meet evolving requirements. Our experts can help you understand the specific implications of the Omnibus Package for your organisation and develop a tailored approach that aligns with your business goals. To delve deeper into these changes and their implications, we invite you to join our upcoming webinar, where we will provide a detailed analysis of the Omnibus Package and offer practical guidance on how to adapt your sustainability strategy for long-term success. 

By staying informed, adapting strategically, and embracing a proactive approach to sustainability, businesses can not only navigate the changing regulatory landscape but also gain a competitive edge in the marketplace. 

“The need for climate action is clearer than ever. Sustainability efforts go beyond compliance—they drive resilience, unlock competitive advantages, and ensure long-term growth.” 

Disclaimer: We strive to address all topics as thoroughly as possible based on the latest available information. However, given the evolving nature of regulatory developments , the insights shared in this blog are for informational purposes only and should not be considered as legal or compliance advice.