Authored by the Article One Regulatory Alignment Centre of Excellence
The European Commission’s recent Omnibus simplification proposal has become a key topic of discussion among sustainability and corporate governance professionals. There has been seemingly endless speculation, analysis, and debate. While much of the discourse has focused on technical and legal details, those not immersed in EU policy making may find it challenging to make sense of the noise and understand what this means for their work.
Our hope is to offer a clear and accessible overview of what the Omnibus is, what the proposed changes in this Omnibus are, where the process stands today, and what to expect next. Finally, we will close with some practical advice for companies looking to move forward, because while the regulatory landscape may shift, the direction of travel remains clear.
What is an ‘omnibus’?
In EU policy making, an omnibus package amends multiple pieces of existing legislation at once. This approach allows for coordinated changes across related legislation, which should in theory, make it easier to align policies with broader political or economic goals. The EU Commission has been explicit that the objective of its simplification agenda is to simplify and reduce burdens without altering its commitment to ‘greener and fairer society and economy.’ The Commission is expected to introduce several omnibus packages covering different topics, but here we refer to the ‘Omnibus’ packages on sustainability due diligence and reporting.
What are the proposed changes?
The CSRD sets rules for companies above a certain size on how they should report publicly about sustainability matters. The Omnibus packages propose changes to the current requirements, including but not limited to:
- Reduced scope: Companies with fewer than 1,000 employees and less than EUR 50 million would fall out of scope. The Commission expects this would remove obligations for 80% of companies currently in scope.
- Postponed reporting requirements: The reporting requirements for large companies not yet implementing CSRD and for listed small- and medium-size enterprises (Wave 2 and 3), would be postponed by two years. This means that companies currently required to report in 2026 and 2027 on their previous fiscal year would not have to report until 2028 and 2029.
- Removal of sector-specific standards: The proposal would remove the empowerment for the Commission to adopt sector-specific standards.
The CSDDD introduces an obligation for companies above a certain size to identify and address potential and actual adverse impacts to human rights and the environment within their own operations and aspects of their value chain. Once again, the Omnibus packages propose changes to the current CSDDD legislation, including but not limited to:
- Postponed transposition and application: The transposition deadline and the first phase of the application of CSDDD requirements, covering the largest companies, would be postponed by one year, from July 2027 to July 2028.
- Frequency of effectiveness monitoring reduced: Companies would need to assess the adequacy and effectiveness of their due diligence measures, and make updates to those measures, only every five years instead annually. However, the European Commission clarified that companies would still need to assess the implementation of due diligence measures and update them whenever there are “reasonable grounds to believe that the measures are no longer adequate or effective.”
- Narrowing requirements to include indirect (tier 2+) suppliers in due diligence: Companies would no longer be required to pursue in-depth due diligence on indirect suppliers in their chain of activities unless they have ‘plausible information’ suggesting harm has occurred or could occur. This change would generally limit due diligence measures required of companies to their own operations, subsidiaries, and direct (tier 1) suppliers in their chain of activities.
- Stakeholder engagement limited: Both the set of stakeholders companies are required to engage and the points at which they are required to engage would be narrowed. This narrowing of the requirement would notably exclude civil society organizations, unless they are representing individuals or communities ‘directly affected’ by the company’s operations, and national human rights and environmental institutions, among others.
What happens next?
Over the coming months the Omnibus simplification packages will work their way through the EU’s legislative process. The European Parliament and the Council will review and negotiate the final terms.
In terms of timing, the Commission has asked the Parliament and Council to consider ‘fast-tracking’ (i.e. treat with priority), their proposals. They have specifically requested their co-legislators ‘fast-track’ proposals to postpone two key deadlines:
- CSRD: The application of all reporting requirements for large companies not yet implementing CSRD and listed SMEs (wave 2 and 3) due to report in 2026 and 2027 by two years.
- CSDDD: The postponement of the transposition deadline and the first wave of application, by one year from 2027 to 2028.
It is expected, but unconfirmed, that the Parliament and Council will agree to these specific proposals to postpone.
Regarding the broader proposed changes, the European Parliament and the Council will review, and all three co-legislators must reach agreement before the changes enter into force. The Parliament and Council may agree with all of the Commission’s proposals or, as is more likely, they may have differing positions and suggest amendments. How long it will take for all three to reach agreement, and ultimately what that agreement will contain remains uncertain.
What should I do?
For teams working on these topics, and trying to make forward progress, this uncertainty can seem like a setback. It is important to remember, regardless of the outcome, mandatory reporting and environmental due diligence will be a legal requirement. Whether your company is 10 days or 10 years into focusing on its environmental and human rights impacts, there are significant benefits associated with continuing to progress in this space
If you’ve already gotten started, consider using this time to assess the effectiveness of the approach you’re taking. This potential delay presents an opportunity to validate, fine tune, or even reset the steps companies are taking to prevent and address human rights and environmental impacts with an eye to making them more effective. We recommend companies consider assessing the effectiveness of measures they have place, for example through site-level impact assessments and consultation with stakeholders.
If you’re just getting started, keep going. Many teams are successfully leveraging their efforts to align with international standards on responsible business conduct (e.g., the UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises) to advance a principled and globally consistent approach to compliance. In our experience, companies that have set a commitment to respect human rights and the environment and have proactively defined how they’ll meet that commitment have been better prepared for legislative requirements as they arise. Typically, prepared companies are more adaptable because they have a clear objective, a way of working together, and a roadmap for continuous improvement. Conducting a corporate-wide human rights impact assessment (HRIA) is one effective way of achieving this and provides a strong foundation for meeting mandatory human rights due diligence requirements. Technology companies have also found this approach to be effective in preparing for digital platform and Artificial Intelligence regulations.
What is the key takeaway?
The biggest takeaway for those working in this field is that while the legislative framework continues to evolve, its core direction remains unchanged. Companies should expect mandatory sustainability reporting and human rights and environmental due diligence to remain part of the regulatory landscape, even if some aspects of timing, scope and technical detail are refined. Companies applying an approach that leverages existing international standards will be better prepared and less likely to have their strategy upended by constantly evolving legislative requirements.
Article One will continue to track these developments and remains committed to helping teams navigate them. If you have a question, idea, or could use support moving forward, please reach out to us at hello@articleoneadvisors.com.
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