The EU’s “Simplification Omnibus” – What It Means for Businesses
On February 26, 2025, the European Commission rolled out a major regulatory update known as the "Simplification Omnibus." The goal? To ease some of the sustainability and environmental rules that businesses across Europe have been grappling with.
The move comes amid concerns that strict EU regulations are making European companies less competitive compared to their counterparts in the U.S. and China.
Key Changes in the Simplification Omnibus
Sustainability Reporting
Who’s Affected? The Corporate Sustainability Reporting Directive (CSRD) will now only apply to companies with more than 1,000 employees and either:
- A net turnover of over €50 million, or
- A balance sheet above €25 million.
SMEs Get a Break: Small and medium-sized businesses (SMEs) can opt out of providing data to larger companies for CSRD compliance.
Due Diligence
Slower Rollout: The Corporate Sustainability Due Diligence Directive (CSDDD) is now delayed until mid-2028.
Narrower Scope: Companies will only need to monitor their direct supply chains, and instead of annual assessments, they’ll be required every five years.
Carbon Border Adjustment Mechanism (CBAM)
Higher Thresholds: Companies importing less than 50 metric tons per year (about 182,000 importers) will now be exempt, reducing the number of businesses affected.
What’s the Impact?
The European Commission estimates that these changes could save businesses over €6 billion per year in administrative costs. While this is welcome news for many companies, not everyone is happy.
Environmental groups and some EU member states argue that these rollbacks weaken corporate accountability and sustainability efforts. Organisations like the International Federation for Human Rights (FIDH) and WWF Europe warn that reducing regulations could hurt progress toward environmental goals and transparency.
What’s Next?
For these proposals to take effect, they need approval from the European Parliament and a majority of EU member states. The Commission is pushing for a quick decision to help businesses operate with fewer regulatory burdens, but the debate over balancing competitiveness with sustainability is far from over.
What This Means for Your Business
How businesses should react depends on a few factors:
Do you still fall under the mandatory reporting umbrella? If the answer is yes, then you are likely already behind schedule and possibly spending a lot of money on external consultancy and/or increasing your internal head count to try and deliver the reporting requirements manually.
This goes against the very premise of the Omnibus which is to drive efficiency and maintain competitive edge. As regulations continue to roll-out and evolve you need to find an efficient, automated solution to deliver your reporting requirements in the medium to long term.
If you answer is no then you have some options….
If you have already incurred the time and monetary cost of completing your DMA then it makes sense to harness this to achieve some level of reporting compliance which will offset the effort and expense of becoming compliant later.
Businesses are not static and by the time your DMA is finalised, it may already be outdated. Use what you have now to build a reporting foundation, prioritising automated data gathering and reporting wherever possible. Take an incremental approach to gradually transition your business to a sustainable platform over time, rather than an immediate transformation.
By doing so, you will be realising the true benefit of the regulations at a steady pace before you are compelled to do so when regulations evolve further.
Similarly, if you are no longer required to report under CSRD but have already publicly committed to sustainability goals, you will need a plan for how you can continue to deliver against this without haemorrhaging money.
CSRD and similar regulations didn’t develop in a vacuum but rather as a result of a global market trends which saw sustainability become a competitive lever. That trend has not gone and your investors, employees and customers will still be looking for you to demonstrate your sustainability credentials. Sustainability reporting needs to become a 'Business as Usual' activity - automated, integrated and with low manual effort - Technology will be the solution here.
Our Final Thoughts:
The only certainty in regard to EU sustainability regulation is that it will evolve. The Omnibus, if passed into legislation, will simplify reporting and introduce a more measured roll out. However, it does not fundamentally alter the EU’s outlook on sustainability regulations.
De-regulation is not a common theme found within the EU. Regulations will continue to roll-out, evolve and expand.
Companies should stay committed to their sustainability reporting plans while strategically leveraging technology and expert consulting partnerships. Doing so will not only enhance reporting efficiency but also help future-proof their compliance strategies against the volatile regulatory landscape, minimising the risk of non-compliance as frameworks continue to develop.
For expert advice on leveraging technology and consulting solutions to navigate global sustainability regulations, book a free 1:1 consultant with our ESG experts.