EU Omnibus package: what the CSRD simplification means for companies
On 26 February 2025 the European Commission published its first Omnibus simplification package, targeting the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy. The Commission estimated the proposals could reduce administrative burdens substantially, with a large share of companies removed from CSRD scope.
The package came in two parts: a quick 'stop-the-clock' directive postponing obligations, and a broader proposal to change the content and scope of the rules.
Stop-the-clock: a two-year delay
The stop-the-clock directive was fast-tracked through the European Parliament and Council and adopted in April 2025. It postpones CSRD reporting by two years for companies in the second and third waves — large companies not yet reporting, and listed SMEs — and delays the CSDDD transposition and first application by one year.
Companies in the first wave, broadly large public-interest entities with more than 500 employees, were not affected and continued reporting for financial year 2024 and beyond.
Proposed scope and content changes
The Commission's content proposal would limit CSRD reporting to companies with more than 1,000 employees and either turnover above €50 million or a balance sheet above €25 million — removing roughly 80% of companies from the original scope. It also proposed dropping the planned move from limited to reasonable assurance and abandoning sector-specific standards.
EFRAG was mandated to simplify the European Sustainability Reporting Standards, with a focus on reducing the number of data points and clarifying the double materiality assessment. The content proposal continued through the legislative process, with co-legislators debating the final thresholds.
The value-chain cap
A key proposal is a 'value-chain cap', limiting the information that in-scope companies can request from smaller business partners to what is set out in a voluntary standard based on EFRAG's VSME. This is intended to protect SMEs from burdensome data requests passed down supply chains.
What companies should do
Companies that have fallen out of scope, or may do so, face a strategic choice: pause entirely, or maintain a proportionate reporting capability. Banks, investors and large customers will still ask for sustainability data, and voluntary reporting based on VSME may meet those needs efficiently.
For companies remaining in scope, work on materiality assessments, data systems and controls remains valuable regardless of the final text.
Conclusion
The Omnibus package is a recalibration rather than a reversal of EU sustainability reporting. Companies benefit from more time and potentially lighter requirements, but stakeholder demand for credible sustainability information has not gone away.
