European Commission's “Omnibus” proposal: Streamlining sustainability regulations and what ‘stop the clock’ means for you

To simplify and harmonize sustainability regulations, the European Commission has introduced a broad reform package aimed at reducing administrative burdens while maintaining environmental commitments. This initiative comes as businesses struggle with the complexity of existing reporting and due diligence frameworks.

The “Omnibus” proposal, unveiled in February 2025, is a comprehensive initiative aimed at simplifying sustainability regulations while balancing corporate responsibility with competitiveness.  

The proposal introduces significant modifications to key directives, as it seeks to reduce administrative burdens on businesses while maintaining the EU’s sustainability objectives.  

The directives impacted include, the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Carbon Border Adjustment Mechanism (CBAM). 

How will the directives change?  

Corporate Sustainability Reporting Directive (CSRD): 

• Scope reduction: Higher reporting threshold: Only larger EU companies, those with over 1,000 employees and either a turnover above €50 million or a balance sheet total exceeding €25 million, will be required to disclose sustainability information. This change removes about 80% of companies that previously fell under the directive. 

• Revised scope for non-EU companies: Non-EU companies will need to comply with the new rules if they generate more than €450 million in annual turnover within the EU. For branches, the turnover threshold is now €50 million, and subsidiaries must meet the criteria of a "large undertaking" to be included. 

• Simplified reporting requirements: The European Sustainability Reporting Standards (ESRS) are being revised to reduce the number of required data points and make reporting clearer and more comparable.  

• Greater ESG disclosure requirements: Companies may need to include more detailed environmental, social, and governance (ESG) information in their annual reports. 

• Alignment with international frameworks: The new rules could harmonize with international standards like ISSB, GRI, and TCFD, ensuring consistent sustainability reporting worldwide. 

• EU listed SMES: These companies are no longer required to report but can do so voluntarily. The Voluntary reporting standard for SMEs (VSME) will also be expanded. 

Corporate Sustainability Due Diligence Directive (CSDDD): 

• Implementation delay: The enforcement of due diligence obligations is postponed to mid-2028, providing companies additional time to adapt.  

• Focused supply chain oversight: Due diligence responsibilities now focus on direct suppliers with exceptions for cases where there are plausible adverse impacts beyond Tier 1. Assessments are required every five years instead of annually. 

• Enforcement mechanisms: The EU civil liability regime has been removed, deferring to national civil liability. The cap for financial penalties (5% of global turnover) has also removed, leaving it up to member states to set fines that are effective and proportionate.  

• Climate transition plan: The requirement to "put into effect" the transition plan has been removed, shifting the focus to including "implementation actions" within the plan. This adjustment aligns corporate obligations for climate transition plans with the CSRD, whereas the initial CSDDD imposed significantly stricter requirements. 

Carbon Border Adjustment Mechanism (CBAM): 

• Exemption threshold: Importers handling less than 50 metric tons of carbon-intensive products annually are exempt, this will exclude about 182,000 importers from CBAM obligations.  

• Revision of carbon pricing mechanism: Potential updates to the carbon pricing methodology to align CBAM with the EU Emissions Trading System (EU ETS) and other global carbon pricing frameworks. 

• Adjustment of sectoral scope: Omnibus may expand or refine the sectors covered by CBAM, potentially including more industries beyond the initial focus on cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen. 

• Stronger compliance and enforcement measures: Introduction of stricter monitoring, reporting, and verification (MRV) rules to ensure accurate emissions data from importers. 

 

The latest changes: The Council of the EU approves "Stop-the-Clock" with no amendments 

One of the most significant proposals as part of the omnibus is the "stop-the-clock" initiative which aims to delay the enforcement of the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD). The delay is meant to give businesses more time to adapt to these complex rules, reducing immediate administrative burdens while still maintaining the EU’s long-term sustainability goals. 

On 26 March 2025, the Council of the EU approved the Commission’s “stop-the-clock” proposal under the Omnibus Simplification Package without any amendments. This means that:  

1. The Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) is delayed to 2028, allowing companies more time to adapt. 

1. Structural revisions: In parallel, the Commission is revising the content of these directives, potentially modifying sustainability disclosure and due diligence obligations. 

With the Council’s approval of the “stop-the-clock” without changes, the proposal now moves to the European Parliament, which will vote on April 1 to determine whether to fast-track it via the urgent procedure. If Parliament also approves it without amendments, the proposal will be swiftly adopted without trilogue negotiations. 

What does this mean for you?  

 

While the postponement of reporting and due diligence obligations provides regulatory relief, businesses must not view this as a reason to deprioritize sustainability. The market, investors, and consumers still demand transparency and credible data. 

 

Implications for climate action and sustainability 

While the “Omnibus” proposal aims to enhance the competitiveness of European businesses by alleviating regulatory pressures, it has sparked a debate regarding its potential impact on the EU's climate and sustainability goals. 

Critics argue that reducing the number of companies required to report sustainability metrics and easing due diligence obligations could undermine transparency and corporate accountability. This shift may obscure critical data necessary for informed investment decisions and hinder progress toward the EU's ambitious target of a 55% reduction in emissions by 2030.  

Supporters argue that simplifying regulations will cut unnecessary bureaucracy, allowing companies to focus resources to meaningful sustainability initiatives rather than compliance. This could drive innovation and accelerate the transition to a green economy. 

Given these regulatory changes, companies must stay committed to sustainability. Voluntarily adopting robust environmental and social governance practices not only prepares businesses for future regulations but also meets rising consumer and investor expectations. Making sustainability a core strategic priority ensures long-term success while contributing to global climate action and the protection of human and workers’ rights. 

The “Omnibus” proposal marks a key shift in the EU's sustainability regulation. Businesses should see this as an opportunity to strengthen their sustainability frameworks, drive positive social and environmental impact, and gain a competitive edge in an increasingly eco-conscious market. 

 

The Bigger picture: Does this weaken the EU’s sustainability leadership? 

The EU has positioned itself as a global leader in sustainability regulation, but this delay raises key concerns: 

• Competitive positioning: With reporting postponed, will other markets (e.g., the U.S., Asia) take the lead in shaping the global sustainability agenda? 

• Corporate ESG strategies: Will businesses maintain high sustainability standards voluntarily, or will some scale back efforts in the absence of immediate regulation? 

• Investor confidence: The shift may create uncertainty in sustainable investment decisions if ESG data becomes less standardized. 

 

Driving sustainable business success beyond compliance 

As EU sustainability regulations evolve, businesses must adapt. While the European Commission’s streamlined reporting rules aim to reduce complexity, reporting alone is not sufficient. Opting not to disclose your sustainability performance simply because it’s no longer required doesn’t eliminate the need for transparency. Instead, it exposes your business to potential risks and competitive disadvantages.  

Consumers today are increasingly interested in the social and environmental impact of their purchasing decisions. Beyond carbon footprints and sustainability claims, they seek transparency on issues such as ethical labour practices – including risks of forced labour and child labour within global value chains – along with resource use, waste impact, biodiversity effects, and product lifecycles. Companies that provide credible, verifiable data on these factors can build trust, enhance brand loyalty, and secure a competitive edge in an era of conscious consumerism. 

Sustainability data is more than just a strategic compliance requirement – it’s a strategic business asset. It plays a crucial role in securing green financing, increasing investor confidence, and guiding M&A decisions. Beyond financial benefits, it also helps attract, engage, and retain talent by aligning work with a greater purpose, ultimately driving both sustainability and business success. Simply put, it builds the gap between words and actions, reinforcing credibility. 

Companies should see this delay as an opportunity, not a reason to pause sustainability efforts. Voluntarily maintaining strong ESG disclosures and independent sustainability assurance will reinforce trust and credibility, positioning businesses ahead of future regulations. The Omnibus proposal and “stop-the-clock” delay mark a pivotal moment in the EU’s sustainability regulatory landscape. However, businesses should not wait until 2028 to take action. Those that continue to invest in sustainability, embed ESG principles, and demonstrate leadership will gain a competitive edge in an increasingly eco-conscious market. 

At DNV, we help organizations move beyond compliance by embedding sustainability into their core strategy and ensuring transparency at every level. While regulations may shift, the need for trusted, data-driven sustainability practices remains essential – not just for compliance, but for long-term resilience and meaningful impact. 

Learn more about our ESG and Sustainability services 

3/27/2025 2:42:00 PM