News on the Omnibus Initiative and upcoming ESG obligations

With the Omnibus Package, the European Commission presented a comprehensive package of measures on 26 February 2025 to postpone and simplify sustainability (reporting) obligations. In the meantime, the EU Commission has adopted the first directives, taken decisions and developed work plans that affect SMEs in particular. In this article, we provide you with an update on the postponement of the first application, discussions on the group of users of the CSRD and the timetable for the development of the changes to the content of the CSRD and the EU taxonomy as well as the due diligence obligations under the European supply chain law, the CSDDD.

Stop the Clock - Postponement of the initial application of the CSRD

A central element of the omnibus package is the postponement of the initial application of the CSRD in the form of the so-called "Stop the Clock" directive. On 16 April 2025, the European Commission officially adopted the following postponements:

• Sustainability reporting in accordance with CSRD/ESRS: postponement by two years for companies in wave 2 (originally non-capital-market-oriented large companies) from 2025 to 2027 and wave 3 (originally capital-market-oriented medium-sized and small companies) from 2026 to 2028
• Supply Chain Directive (CSDDD): postponement of first-time application by one year from 2027 to 2028

The postponement of mandatory sustainability reporting in accordance with CSRD/ESRS for companies in the second or third wave initially means a general delay for them. The EU Commission is thus ensuring that they do not have to report on the year 2025 for the first time as planned, as the content of the report is likely to change again as a result of the other measures in the omnibus package. The reporting obligations under the EU Taxonomy Regulation, which result from the CSRD reporting obligation, will be postponed accordingly.

The already known "stop-the-clock" directive does not apply to wave 1 companies (large capital market-oriented companies). In order to relieve the burden on these companies already subject to reporting requirements for the years 2025 and 2026, a so-called "quick fix" regulation, which is intended to suspend certain disclosure obligations, is in the works. According to a statement by the EU Commission on 13 May 2025, a delegated act is being prepared for this, which is expected to be published "before the summer". The aim is to temporarily suspend selected requirements - for example on the financial impact of all five environmental aspects or on certain information about the company's own employees (e.g. social security, training, health protection) - for the transition. 

In the case of the EU Supply Chain Directive (CSDDD), the implementation obligation for companies in the area of application is postponed to 26 July 2028 or 29 July 2029, depending on the number of employees and net turnover.

Discussions about the user group of the CSRD according to Omnibus

There is currently much debate in the EU as to which companies remain subject to reporting requirements under the CSRD. The focus is particularly on the number of employees. The current CSRD sets a minimum of 250 employees as the lowest threshold. The Omnibus Initiative proposed an increase to at least 1,000 employees. Other thresholds of 500, 3,000 and even 5,000 employees are currently being discussed . This also involves the application of possible alternative reporting standards for companies that fall outside the scope of the CSRD, e.g. the VSME, the standard for voluntary reporting for SMEs. Indirectly, all companies remain affected, as companies subject to reporting requirements can request data.

Adaptation of the content of the CSRD and ESRS

The EU Commission has commissioned EFRAG to revise the European Sustainability Reporting Standards (ESRS) as announced in the omnibus package. EFRAG already carried out a public consultation on the simplification of the existing ESRS in April. We can expect a draft for a delegated act by the end of July, which in turn is to be consulted on by the end of September. The final revised draft will then be submitted to the EU Commission in October 2025. The aim of the revision is to reduce disclosure requirements by deleting numerous data points, focussing more on quantitative rather than narrative disclosures and providing clearer and more comprehensible requirements on materiality and the application of reporting obligations. In addition, the coherence of the ESRS with other international sustainability reporting standards is to be improved. The development of sector-specific reporting standards will be further suspended.

Changes to the content of the EU Taxonomy Regulation

Changes to the content of the EU Taxonomy Regulation as part of the omnibus initiative relate in particular to the following simplifications:

• the simplification of the reporting forms in which the taxonomy indicators are reported;
• he introduction of a materiality threshold: If taxonomy-capable activities account for less than 10 % of sales revenue or the respective investment or operating expenses, it will be sufficient in future to establish taxonomy capability - a conformity check will then no longer be necessary;
• a simplification of the proof of the "do no significant harm" criterion in the area of environmental pollution: existing uncertainties are to be eliminated by either completely deleting a previously unclear paragraph in Annex C (alternative 1) or replacing it with a more precise version (alternative 2). The aim of Alternative 2 is to align the identification of hazardous substances more closely with the REACH Regulation. In future, the specific list of hazardous substances from Part 3 Annex VI of the CLP Regulation could be used for this purpose, which would eliminate the need for additional tests. In addition, the current restriction that affected substances may only be used under "controlled conditions" if no alternatives are available should be removed.

As part of the first omnibus package, the EU Commission launched a "Call for Evidence" on 26 February 2025 on amendments to three delegated acts of the EU taxonomy (Taxonomy Disclosures, Taxonomy Climate, Taxonomy Environmental Delegated Act). The consultation ran until 26 March 2025 and the final amended delegated acts are expected to be adopted in the second quarter of 2025 and apply from 1 January 2026.

What's next for sustainability reporting and due diligence?

The extensive changes brought about by the omnibus package are far from complete. Drastic changes to reporting obligations and the scope of application have been criticised by the financial community (investors, ECB, Eurosif and PRI), who fear that the reduction in reporting obligations will result in a lack of transparency and comparability, for example for ratings. The EU Ombudsman has also officially requested a review of the omnibus procedure. A survey by the organisation WeAreEurope shows that the private sector rates the CSRD positively overall: 86% of the 1,000 companies surveyed across Europe see the benefits for strategies, risk analyses and impact management. Companies that have not yet started implementing CSRD are still the most critical of it, although only a few cite poorer competitiveness as a disadvantage.

The changes in the omnibus package primarily concern CSRD, EU taxonomy and CSDDD, but also have an impact on the Battery Regulation. Other regulations such as the EUDR (due diligence obligations for deforestation-free supply chains, from 2026 or June 2026 for small companies), the Packaging Ordinance (PPWR, from August 2026) and the Forced Labour Ordinance (from 2027) remain unaffected. 

The "Stop the Clock" decision now offers SMEs a little more time to identify procedures and prepare strategically for future requirements until their direct or indirect impact is finalised. We will keep you informed of further developments at regular intervals.