EU publishes results of the omnibus procedure

On 26 February 2025, the European Commission published the results of the omnibus procedure. In the days leading up to this, some information had already leaked out and triggered controversial discussions. There is now clarity about the Commission’s proposal, which will go to the European Parliament and the European Council for consultation and then to the member states for negotiation. The core of the proposal: the number of companies subject to reporting obligations is to be drastically reduced, the reporting obligation for companies in the so-called second and third wave, which will still be affected under the new proposal, will be postponed by two years and the required transparency obligations will be significantly weakened. In corsus’ view, the draft undermines the importance and urgency of the sustainability challenges we are facing.

The omnibus procedure was initiated in order to consolidate various regulations, including the Corporate Social Reporting Directive (CSRD), the EU Taxonomy and the Corporate Social Due Diligence Directive (CSDDD), to reduce bureaucracy and thereby strengthen Europe’s competitiveness. Even though the CSDD increased the bureaucratic burden in the first few years and caused the bureaucracy cost index in Germany to rise, it should be noted that it has fallen significantly in recent years.
The proposal includes the following key changes:

CSRD

• The thresholds for when a company is required to report have been raised. Only companies with more than 1,000 employees and a turnover of more than € 50 million or a balance sheet total of more than € 25 million are now subject to the reporting obligation. This reduces the number of companies subject to reporting requirements by 80 %.
• The number of data points to be reported is to be reduced.
• The announced industry-specific standards will not be introduced.
• The reporting obligation for companies that are not yet required to report will be postponed by 2 years.
• There are also plans to improve the guidance on fulfilling the reporting obligation and to clarify unclear provisions.
• The audit will be limited to the so-called limited assurance.
• The information to be provided to suppliers of reporting companies will be limited to the topics included in the Voluntary Reporting Standard for Small and Medium Enterprises (VSME) published at the end of 2024.

CSDDD

• The implementation deadline for the CSDDD is postponed by one year.
• The implementation of human rights due diligence obligations is limited to direct suppliers (Tier 1).
• The ‘trickle-down’ effect is also reduced here. The information that smaller companies must provide is limited, with exceptions, to the information in the VSME standard.

Even though the current proposals may still change, the trend is clearly recognisable: transparency obligations are reduced, the obligation to disclose the contribution to realising the EU’s net zero target and to describe the path to achieving it no longer exists to the same extent. In addition, the identification, tracking and remediation of human rights violations throughout the supply chain no longer plays a significant role.

Even if some of the proposals are sensible – such as improved guidance on fulfilling the reporting obligation – the question arises as to why this was not recognised before the introduction of the CSRD and the CSDDD and why ambitious, sustainability-oriented companies were not heard much earlier in the process. If the reporting obligation is now postponed and the content reduced and changed, the companies that have gone ahead will be penalised in particular. They have already invested a lot of time and money in order to fulfil the reporting obligation. They have dealt with the CSRD, found solutions to unclear requirements with the help of consultants, collected data at great expense and implemented this structurally within the company. This is a clear competitive disadvantage for these first mover companies. In addition, the hoped-for competitive advantage of being able to set themselves apart from the competition through good, transparently disclosed sustainability performance is now likely to fail to materialise or at least considerably reduced.

It is particularly bitter that the reporting obligations for sustainability and human rights due diligence in the supply chain have been significantly reduced by the current proposal. The violation of human rights usually occurs in the upstream stages of the value chain, for example in the cultivation of agricultural products in various countries, in mining or in the manufacturing of textiles. In many cases, this is also where the greatest environmental impacts occur. However, this is precisely what no longer needs to be considered under the CSDDD and there are no information obligations regarding the supply chain under the VSME either.
In our view, the uncertainty that the proposal leaves behind also weighs heavily: How long will it take for the member states to reach an agreement and for there to be clarity on when and what needs to be reported?
And most importantly, it will further delay improvements to the pressing sustainability issues of our time, such as mitigating climate change, reducing biodiversity loss and ensuring human rights due diligence.

We recommend companies that have already set out on this path or are planning to do so: Keep at it and consistently pursue your sustainability strategy. Because only with an ambitious and well-implemented sustainability strategy can you position your company for the future.