The Omnibus: Navigating the summer of simplification

In February 2025, the European Commission put forward its Omnibus Simplification Package, setting the stage for sweeping changes across key EU sustainability legislation, most notably the Corporate Sustainability Reporting Directive (CSRD), the European Sustainability Reporting Standards (ESRS), and the Corporate Sustainability Due Diligence Directive (CSDDD).

Over the summer, things have been moving rapidly: EFRAG released substantial draft revisions to the ESRS, Wave 1 ESRS reporters were introduced to an “immediate relief” package, and institutional positions remain sharply divided. With this fast pace of change, keeping up has practically become a full-time job. That’s why we’ve done the heavy lifting and provide you this all-in-one cheat sheet of the updates every sustainability professional needs to know.

EFRAG’s bold revision of the ESRS

The most striking development is EFRAG’s comprehensive overhaul of the ESRS, based on 800 survey responses and numerous stakeholder consultations. While still an Exposure Draft and therefore subject to change, the revisions are significant:

• 57% reduction in mandatory datapoints
• 68% decrease in total disclosures
• 55% shorter standards

These figures are eye-catching and undoubtedly a big change to the original ESRS, but they need some context:

• Many of the cuts concern disclosures that were already voluntary. These have now been removed from the core regulatory text and mostly migrated into a new “Non-mandatory illustrative guidance” (NMIG).
• The Policies, Actions, Targets (PATs) structure, including the Minimum Disclosure Requirements (MDRs), has been streamlined. Instead of appearing in both ESRS 2 and the topical standards, they now sit mainly within ESRS 2.

A full Log of Amendments can be found here.

• The disclosure requirements obliging companies to calculate and report the anticipated effects of material environmental IROs have been dropped from all environmental standards except E1 (Climate Change).

 

 

Besides these cuts, long-awaited clarifications have been provided around the Double Materiality principle. Areas that previously created uncertainty, such as the materiality of information criterion, the aggregation vs. disaggregation principle, and guidance on gross versus net, are now clearer. The once-ambiguous link between material IROs and the sustainability topics to be reported has also been better defined. Additionally, specific metrics in the topical standards have been sharpened, with perhaps the most striking change being that companies must now report every incident of corruption and bribery.

Overall, this revision represents a direct response to the implementation challenges flagged by companies during their first year of CSRD reporting. On the one hand, this pragmatism acknowledges the realities practitioners face; on the other, it risks reinforcing a business-as-usual mindset rather than pushing corporate sustainability forward.

Important to note is that the upcoming trilogue negotiations will play a decisive role in shaping the final revised ESRS. The outcome of the compromise between the three EU institutions could mean either a further slimming down of the standards or just minor adjustments. We summarise their positions in the section below.

Meanwhile, the debate isn’t limited to Brussels. EFRAG’s public consultation is open from 31 July to 29 September 2025, giving businesses, investors, and civil society a direct say in the future of EU sustainability reporting. Do the proposed changes strike the right balance between practicality and ambition? Now’s your opportunity to have a say.

Institutional chess: Where the power players stand

The trilogue negotiations, expected to begin in late 2025, will bring together three distinct visions for the CSRD’s and CSDDD’s future:

1.  The Commission’s original proposal

Published in February as part of the Omnibus Simplification Package, the European Commission suggested that companies should only fall under the CSRD if they have more than 1,000 employees – a move that would cut over 80% of companies out of the original scope. Listed SMEs would be removed entirely, and for non-EU parent groups the EU-generated turnover threshold would rise sharply from €150 million to €450 million. For the CSDDD, no changes to the scope thresholds were proposed, but several of the directive’s original obligations would be “relaxed”. The Commission presented this package as a “simplification,” intended to reduce reporting costs for smaller and mid-cap businesses.

2. The Council’s business-friendly stance

Over the summer, the Council adopted its negotiating mandate. Member States endorsed the proposed 1,000-employee threshold but went further on simplification by raising the net-turnover requirement for EU companies to a staggering €450 million. On the CSDDD, the Council pushed thresholds even higher: to more than 5,000 employees and €1.5 billion in turnover (compared with the current 1,000 employees and €450 million). The Council also favours easing obligations on Climate Transition Plans by softening the wording in both the CSRD and CSDDD. In addition, it has proposed a maximum non-compliance penalty of 5% of global net turnover – more prescriptive than the Commission’s initial proposal, which had left penalties uncapped.

3. The Parliament’s fragmented voice

The Parliament has not yet adopted its final position, with a JURI and plenary vote expected in autumn 2025. The rapporteur’s draft – reflecting the European People’s Party (EPP) stance rather than Parliament as a whole – is, however, still on the table. It proposes an even narrower scope than the Council: more than 3,000 employees and net turnover above €450 million. Debates are ongoing, and significant pushback has come from S&D, Renew, and the Greens. The draft signals a clear push toward radical scope reduction, but the political divides suggest that trilogue negotiations will be especially contentious.

 

 

Many businesses back a 500-employee threshold

Learn how to create a robust Climate Transition Plan with our step-by-step guide.

Nearly 200 companies and organisations, including major players like Allianz, EDF, and IKEA, have issued a joint statement pushing back against excessive simplification. Their position calls for maintaining regulatory consistency with a 500-employee threshold while preserving key concepts, such as double materiality, risk-based due diligence, and stronger requirements on Climate Transition Plans.

This broad coalition demonstrates that the business community isn’t uniformly seeking the lightest possible regulatory touch. On the contrary, many companies recognise that consistent, meaningful standards better serve their long-term interests than a patchwork of minimal requirements.

A similar position is reflected in a recent research paper by Professor Andreas Rasche and colleagues, which proposes a compromise solution based on the 500-employee threshold. According to the paper, this would bring 6,853 companies back into scope (still a 65% reduction compared to the existing CSRD). Addressing the EU’s cost-saving narrative, the authors show that this approach can actually yield further savings if some companies are not immediately required to obtain limited assurance.

The paper also draws attention to an often-overlooked aspect of the Omnibus proposal: sectors are affected unevenly by the proposed scope reductions. In fact, most companies in sectors critical to the green transition, such as construction and agriculture, would no longer be required to report. Meanwhile, in sectors like healthcare provision and social work, far fewer firms would drop out of CSRD coverage. These risks undermine the directive’s original intent, by excluding precisely those sectors where transparency on sustainability impacts is most needed.

Immediate relief measures for Wave 1 reporters

In July, the European Commission adopted a targeted “quick fix” relief package aimed at easing the burden on companies that began reporting under CSRD in 2024 (the so-called Wave 1 companies).

The “quick fix” Delegated Act allows Wave 1 companies to continue omitting certain disclosures – including anticipated financial effects of sustainability-related risks as well as specific topical metrics – for financial years 2025 and 2026, maintaining consistency with their initial 2024 reporting.

Additionally, the phase‑in reliefs, previously limited to firms with up to 750 employees, are now extended to all Wave 1 companies, ensuring that larger entities benefit similarly in the next two years. In practice, this means that Wave 1 reporters can omit entire material Standards (E4, S2, S3, and S4) from their reporting in the coming years.

The Commission argued that these amendments were necessary as Wave 1 companies were not covered by the earlier “stop‑the‑clock” directive, which delayed reporting obligations for Wave 2 and Wave 3 entities by two years. While the quick fix undoubtedly relieves early reporters of immediate pressure, it must be acknowledged that the reliefs do mark yet another step back from CSRD’s original ambition.

 

What should businesses do right now?

The Omnibus reform does buy companies some extra time, but it doesn’t change the bigger picture: to reach decarbonisation targets and uphold human rights due diligence, investors, business partners, and customers will continue to expect credible sustainability data. The long-term direction is still toward greater transparency – even for firms that may now fall out of CSRD scope.

• Large firms (>1,000 employees)
  Use extra time to strengthen data quality, climate risk assessments, and transition plans.

• Mid-sized companies (Wave 2)
  Don’t stall! Early adopters may gain an advantage as standards stabilise.

• SMEs (<500 employees)
  Mandatory reporting may fall away, but supply-chain pressures remain. Use the new Voluntary SME standard (adopted June 2025).

• Everyone
  Follow revised ESRS developments to stay aligned with expectations of “good reporting.”

Looking ahead

In terms of the concrete legislative timeline, this is how we can expect the next months to play out:

• September 2025: EFRAG consultation closes
• October 2025: Parliament vote
• December 2025: Deadline for national transposition of “stop-the-clock” measures
• Q4 2025-Q1 2026: Trilogue negotiations
• Mid-2026: Expected final Omnibus adoption
• 2026-2027: Transposition of final Omnibus into national law

For European sustainability reporting, the summer of 2025 has been anything but calm. Though often criticised as slow-moving, the Omnibus process has proved that Brussels can move at surprising speed (in this case, arguably even too fast) when business burdens are at stake. Now, if that same urgency were directed toward tackling the climate and nature crises, Europe could be making far more ground-breaking progress.

The past half-year has also laid bare the fragility of the European sustainability agenda. Last-minute changes send mixed and insecure signals, and the new EU-US trade deal suggests Europe is still willing to trade long-term ambition for short-term harmony.

In times like these, it is critical to remember that the bigger picture remains unchanged. Political turbulence aside, Europe will not meet its decarbonisation targets and, more importantly, will not remain within planetary boundaries without meaningful corporate engagement backed by credible and comparable sustainability data.
It will be the companies that continue to raise their ambitions, rather than lower them to a shifting regulatory bar, that will drive the just transition and shape Europe’s future.

 

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For more insights on navigating European sustainability regulations, reach out to Reporting & Policy Team Lead: Ditte Maria Olsen dol@nordicsustainability.com

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Read more

• The European Commission on the Omnibus Simplification Package
• EFRAG’s Amended ESRS
• EFRAG’s 60 day public consultation survey
• EFRAG’s Non-Mandatory Illustrative Guidance
• The EU Commission on the “quick fix” relief package
• Research paper proposing a solution based on the 500-employee threshold
• On climate transition plans
• The new EU-US trade deal