How will the EU’s Omnibus package impact ESG reporting?
The Omnibus Simplification Package, proposed in February 2025, is a recent proposal by the European Commission that seeks to streamline and reduce reporting obligations related to sustainability for companies within the EU.
While the package aims to boost competitiveness by alleviating bureaucratic pressures, some critics have expressed concerns that it may undermine progress in corporate accountability and sustainability efforts.
Annemarie McCurrach, head of marketing at Greenomy, stated that the recently published Omnibus package introduced two proposed directives. These are the ‘stop-the-clock’ delay and the ‘simplification proposal’.
She detailed, “Collectively, they aim to delay the implementation timeline of key sustainable finance legislation and signal a fundamental shift in ESG reporting across the European Union. These proposals are presented under the broader framework of the Competitiveness Compass, introduced by the European Commission earlier this year and inspired by the Draghi report. This report argues for enhancing legal certainty and reducing regulatory and administrative burdens by delivering rules that are fewer, clearer, more future-proof, and coherent in their objectives.”
In the view of McCurrach, one of the most substantial shifts proposed is the re-opening of regulation to reduce the reporting requirements and to move from mandatory to voluntary reporting for many companies falling under the scope of the CSRD and the EU Taxonomy.
She added, “While the Commission argues that simplifying reporting obligations will enhance EU competitiveness, the practical implications are far less clear. Simplifying requirements may encourage greater ESG reporting among SMEs, however the removal of sector-specific guidance risks reducing comparability and clarity—particularly in high-impact industries such as manufacturing and energy. Also, at present, many companies remain uncertain about whether they must report, what exactly must be reported, and when such obligations would apply.”
Furthermore, McCurrach outlined that the ‘Stop-the-clock’ proposal under the Omnibus package proposes a two-year delay in the application of certain ESG reporting requirements.
She remarked, “While the additional time may provide flexibility for some companies, it also penalises those who have already invested in compliance and begun to report. Treating the delay as an opportunity to pause ESG progress is risky, particularly as market expectations—driven by investors, customers, and financiers—continue to evolve regardless of regulatory timelines.”
Re-opening legislation such as the CSRD and the CSDDD prior to their full implementation introduces further complexity, McCurrach states, and the lack of post-implementation data makes it difficult to assess the actual impact of these frameworks and their issues. In addition, the quality and quantity of sustainability data collected across the EU is likely to be reduced – McCurrach explained that this will have implications not only for internal policymaking but also for how EU-based companies are perceived globally.
She said, “In conclusion, while it is premature to fully assess the impact of the Omnibus package, attempting to categorise these changes as inherently positive or negative oversimplifies the situation. Some companies will undoubtedly benefit from the delay and the reduced reporting obligations. However, these adjustments may also make it more difficult for investors and lenders to assess risk and direct capital appropriately. Furthermore, they could hinder companies from presenting a consistent and credible narrative about their sustainability performance to stakeholders, including the public and the financial community. “
Advice for firms
What advice would McCurrach give to companies on the Omnibus package? ”While the Omnibus proposals introduce a degree of regulatory relief, particularly through timeline extensions and simplified scope, they should not be interpreted as a reason to slow ESG efforts. On the contrary, this transition period presents a strategic opportunity for firms to strengthen their sustainability frameworks without the immediate pressure of full compliance,” she said.
McCurrach remarked that organisations should use this time to advance what can be considered ‘no-regret’ actions – which are initatives that deliver long-term value irrespective of legislative timelines.
She added, “Conducting a Double Materiality Assessment, undertaking a robust ESG gap analysis, and preparing internal data systems are foundational steps that will position firms for success whether under the full CSRD, the voluntary VSME framework, or in response to growing market-driven ESG expectations.”
McCurrach also emphasised that ESG disclosure will increasingly be driven by stakeholder requirements rather than just regulation. “Supply chain partners, financial institutions, and investors will continue to request ESG information, even from companies falling outside the revised regulatory thresholds. Voluntary reporting frameworks such as VSME will become critical tools for maintaining transparency and demonstrating ESG maturity in a lighter but structured way,” she stated.
The Greenomy marketing head also stressed that firms would be wise to keep internal stakeholders informed about the broader direction of EU sustainability regulation.
She remarked, “The Omnibus proposal is a recalibration, not a rollback. The EU’s ambition under the Green Deal remains unchanged, and regulatory requirements are likely to evolve further. Building internal ESG capacity now ensures organisations are not only compliant when new requirements crystallise but also strategically resilient and commercially attractive in an increasingly sustainability-driven market.:”
She summarised, “Firms should not treat the Omnibus as a reason to pause ESG action, but rather as a chance to take a more strategic, structured, and value-oriented approach. Those who continue to invest in ESG preparedness during this transitional phase will be far better positioned — competitively, reputationally, and operationally — when the next wave of requirements emerges.
Real value
Elisa Forletta, a partner at Zeidler Law, remarked that for firms navigating these changes brought on by the Omnibus package – Zeidler’s advice is clear. “Engage with investee companies, especially those not directly subject to the requirements. Understand whether they plan to comply voluntarily and gauge the extent and format of the ESG data they will make available.
“Ultimately, now is the time to focus on the underlying work rather than just the words—namely, the actual disclosures. This is where real value will be created moving forward,” she stated.
Simplification and streamlined
Steven Strange of ION Asset Management, explained that the European Commission’s proposals are by no means final, but their ambition simplifying previously complex and incoherent legislation is clear.
He explained, “The proposed changes differ significantly from the original rules and will reduce the number of affected companies, postpone reporting timelines and cut required data points by nearly 70%. For asset managers, the revised reporting obligations will be much simpler, and will likely be music to the ears of smaller firms who are often overwhelmed with reporting requirements and the implementation of new regulations.”
As for how this will impact ESG reporting, Strange stressed that the key debate is whether the ‘simplified approach’ detracts from the original purpose of implementing a sustainable framework.
He said, “The proposed new reporting requirements will be much easier to follow, but with fewer data points collected, the question remains as to whether the dataset will still be effective for reporting. The Omnibus proposal is alarming to many who feel a reduction in regulation will impact sustainability and green goals, and many asset managers and owners have asked the European Commission to “preserve the integrity and ambition” of the framework. There is also a more practical element to concerns, as many firms have already invested in preparations for CSRD reporting. If the proposed changes take effect, the time, effort and resources firms have invested could go to waste.”
As for advice Strange would give – while these are only proposed changes, he suggests firms will need to begin their planning now.
He explained, “Waiting to react to the proposal’s progress through the EU’s legal process will put firms on the back foot. As it stands, some firms are unclear where a company falls under revised thresholds, and must fully digest the potential impact of the revised changes.
“The proposals may mean that reporting requirements are simplified, but the universe of ESG data is still vast. The initial implementation effort is likely to be high, so it is important that firms understand their potential reporting obligations ahead of time to allow for adequate preparation. Even more fundamentally, investors will expect transparency even with reduced reporting requirements, so firms may still face demand for enriched datasets. Firms will therefore need to leverage technology that will enable them to react and adapt quickly to changing regulations and investor expectations,” said Strange.
A new opportunity
Adrian Smith, CEO and co-founder of Ripple, said the firm thinks the EU Omnibus could be an opportunity for firms to recalibrate their approach to sustainability reporting.
He elaborated, “Some businesses may retrench and do nothing. Others that think beyond compliance and see ESG data as a tool for growth, not just a box-ticking exercise, will gain a competitive edge.
“Under the proposed changes. there will be more reliance on voluntary reporting such as VSME. Companies, SMEs in particular, will continue to get demands for data from customers and investors. This could be the difference between winning and losing a new contract or sealing the deal on an investment round,” he said.
Smith explained that the Omnibus could also be a catalyst to further adoption of smart technology and AI solutions. “Digitisation of sustainability data in the post Omnibus world will be an essential move for businesses. AI and AI agents will radically transform the ingestion, management and disclosure of data so that businesses can stay better connected, compliant and more competitive at a fraction of the current cost and time obligations,” he remarked.
Smith concluded, “Our hope is that businesses will use this opportunity to see the real value in sustainability data as a tool for value creation, which will in turn help with the transition to a more sustainable economy.”
Bringing more confusion?
One voice who seems more confusion than simplification is Lucy Blake, partner at Jenner & Block.
She said, “Companies had hoped the proposed Omnibus would simplify and clarify the myriad of overlapping EU ESG laws. However, far from harmonizing the different laws or providing guidance on areas of uncertainty, the proposals have in fact introduced still more confusion by relitigating adopted legislation.”
She said that these changes undermine the efforts and resources many businesses are already currently investing into compliance and leave many companies unsure how to proceed.
“This uncertainty is compounded for those businesses who operate in both Europe and the U.S., where there is a backlash against ESG in certain states with companies facing litigation, enforcement action – as well as negative attention from the White House and Congress – for considering ESG factors in their decision making. Notwithstanding the unpredictability of the current climate, the extensive criticism of the Omnibus – including from industry – suggests that the dilution of the European ESG norms is far from a fait accompli.Companies in scope are not off the hook yet so should not take their foot off the pedals when it comes to investing in their compliance programmes,” said Block.
Despite the EU Commission previously committing to simplifying European sustainability laws in its proposed Omnibus I directive, Block said that the far-reaching changes to the CSDDD and CSRD announced would represent a radical deregulatory shift if adopted – one that risks compounding confusion for large corporations who are preparing to implement the laws as currently drafted.
She continued, “Among the critical changes proposed, the proposal would drastically reform the most significant obligation for companies in-scope of the CSDDD by easing the requirement that they conduct environmental and human rights due diligence on their entire global chain of activities to instead only include business partners directly above and below them in the supply chain. Such an assessment would only be required for ‘indirect’ business partners where the relevant company has “plausible information” that an adverse impact has occurred. Similarly, the proposed changes to the CSRD would exclude SMEs and small mid-caps, thereby reducing the number of companies in scope by 80%.”
“Global ESG regulation is at a crossroads,” said Block. “However, it remains to be seen whether the proposed Omnibus Directive will be adopted by the European Parliament and Council and—given the politicised nature of the topic—in what form. Whatever the outcome, what is clear is that there is limited appetite in the EU to exclude the operations of large global corporations entirely from the ambit of European sustainability laws, noting the press release describes the proposals as being intended to “focus [the EU] regulatory framework on the largest companies which are likely to have a bigger impact on the climate and environment.”
Simplified compliance
Andromeda Wood, VP of regulatory strategy at Workiva, said that several of the proposed changes reduce the depth or scope of the requirements within the Omnibus.
She said, “For example, the changes proposed to the CSDDD ask companies to look at their direct suppliers from value chains unless there is “plausible information” to suggest more is needed. What’s more, the proposals to update the CSRD also call for changes to the European Sustainability Reporting Standards (ESRS) to focus on quantitative disclosures and the disclosure requirements under EU Taxonomy are also a target.
“These changes simplify compliance, but it should be considered whether they remain proportionate or weaken the original intent. However, the true measure of the effectiveness of the sustainability omnibus package will only become clear once it is finalised and implemented by companies,” said Wood.
How will this impact ESG reporting? According to Wood, overall, the balance looks to have shifted towards deregulation rather than solely simplification – this is a challenge for all those companies finding themselves removed from the scope of the requirements.
She continued, “However, the Commission references voluntary reporting for the CSRD and the EU taxonomy. Plus, stakeholders, particularly investors, will continue to demand data. In fact, a recent Workiva report highlighted that 96 percent [1] of institutional investors agree that integrated reporting enables better decision-making that can improve a company’s financial performance. This indicates that organisations that already see the competitive advantage that ESG reporting brings, will continue to integrate their financial and non-financial reporting.”
Wood remarked that she sees CSRD reports being published across Europe now, including many in jurisdictions that did not complete transposition and from firms that would have been required to report for another year.
She said, “Regardless of Omnibus, a Workiva report stated that 85% of executives will move forward with climate disclosures, while 97% believe sustainability reporting will be a business advantage in the next two years.”
She concluded, “Why are these companies still reporting? If we look into the reports, we find references to responsible business practice, comparability and increased transparency and ensuring that our progress is measurable and verifiable. I’m sure we will continue to see debate on the effectiveness of the proposal, but in the meantime, ESG reporting continues to move forward.”
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