The Omnibus proposal - everything you need to know

March 2025

The EU sustainability landscape is shifting. On February 26, 2025, the European Commission unveiled the Omnibus Package, a proposal designed to reduce regulatory complexity, streamline reporting requirements, and improve business competitiveness while keeping sustainability ambitions intact.

The package suggests major changes to existing frameworks like CSRD (Corporate Sustainability Reporting Directive), CSDDD (Corporate Sustainability Due Diligence Directive), CBAM (Carbon Border Adjustment Mechanism) and the EU taxonomy. These changes would narrow the scope of reporting, delay compliance deadlines, and reduce administrative burdens.

However, despite these adjustments to corporate sustainability reporting and corporate due diligence, businesses will still need supply chain visibility, robust ESG data, and efficient compliance processes.

So, what exactly is being proposed, and what does it mean for companies? Let’s break it down!

Key components of the legislation

Corporate Sustainability Due Diligence Directive (CSDDD)

The proposed CSDDD changes aim to reduce the regulatory burden on companies but may also weaken the directive’s original scope and impact.

1. • Narrowed value chain scope: Due diligence efforts may focus only on own operations and Tier 1 suppliers, with deeper supply chain monitoring required only if plausible risks exist.
   • Simplified due diligence: Companies could face less frequent monitoring (every five years) and fewer stakeholder engagement obligations, with no mandatory disengagement with risky suppliers.
   • Weakened climate transition plan requirements: Companies may still need to adopt a transition plan but would not be required to implement it.
   • Extended implementation timeline: Compliance deadlines may be pushed to 2028.
   • More flexible penalties: The Omnibus proposal may remove the mandatory minimum cap on financial penalties, leaving enforcement to EU member states.
   • Removed automatic liability: Companies may no longer be automatically liable for due diligence failures under EU law - liability could depend on national laws.
   • Reduced burden on SMEs: Large companies might not be allowed to impose excessive reporting requirementson smaller suppliers, potentially reducing compliance costs for SMEs.
     
     
   
   

   Corporate Sustainability Reporting Directive (CSRD)

   The proposed CSRD simplifications will have the biggest impact on companies, as many are already deep into implementation. With significant resources invested, these changes could bring drastic shifts. The proposed adjustments include:

   • Smaller scope: Only 1000+ employees & €50M+ turnover remain in scope. Those already reporting will continue, while others will no longer be required to.
   • Reduced burden on SMEs: The trickle-down effect will be reduced to prevent large-company reporting from overly impacting SMEs in the value chain.
   • Voluntary reporting: Exempted companies can still use VSME standards as a sustainability reporting framework.
   • No sector-specific standards: Fewer required data points.
   • Streamlined ESRS reporting: Fewer mandatory disclosures, more focus on quantitative data.
   • Extended reporting deadlines: Postponed by two years to prevent companies from reporting for 2025/2026 only to be later exempt.

   
   For companies that have already adapted to CSRD, these shifts may come as a relief or a disruption.

1.  

   The EU Taxonomy & Carbon Border Adjustment Mechanism (CBAM)

   The EU Taxonomy and CBAM are key tools for driving sustainable finance and decarbonization in Europe. Proposed changes aim to simplify reporting while still supporting the green transition.

   Key proposed adjustments:

   • Less reporting: 70% fewer templates and simplified DNSH criteria.

   • Lower CBAM burden: Carbon border tax remains but with reduced complexity.

   • More flexibility: Companies can report partially aligned activities.

   • Adjusted Green Asset Ratio: Banks align with new CSRD scope.

   
   These changes aim to make sustainability reporting more practical while keeping the focus on impact.

Due diligence is here to stay

What does this mean for you business? While the Omnibus Package is aimed at reducing administrative burdens, due diligence remains a critical responsibility. Companies still need to assess risks in their supply chains, ensure compliance with sustainability regulations, and transparently report on their impact. The updated rules provide additional time and flexibility, but businesses must continue prioritizing sustainability efforts to meet regulatory expectations and stakeholder demands.

What's next?

With the Omnibus proposal awaiting final approval, companies should continue preparing for CSRD and CSDDD compliance. Although final adjustments may still occur, companies that take a proactive approach will benefit from a smoother transition. Investing in compliance now not only minimizes last-minute disruptions but also positions businesses as leaders in sustainability and corporate responsibility. Organizations that have already started aligning their processes with CSRD and CSDDD will be better prepared to adapt when the final requirements take effect.

Sustainability reporting is no longer just a regulatory requirement - it is a strategic business opportunity. Companies that integrate sustainability into their operations gain a competitive edge, strengthen investor confidence, and enhance long-term resilience. While the first year of reporting may present challenges, the Omnibus package introduces simplifications that will make compliance more manageable over time.

How Worldfavor can help

The Omnibus package will likely change the rules, but responsible business practices and due diligence remain essential. Here’s why sustainable sourcing is more important than ever and how Worldfavor will help you:

• Compliance made easy: Due diligence is still required. Worldfavor automates risk assessments and supply chain monitoring to keep businesses compliant without extra admin and in a resource-efficient way.
• Stronger supplier visibility: With a Tier 1 focus, companies need better oversight of direct suppliers. Worldfavor simplifies data collection and management to meet new obligations.
• Navigating national regulations: Stricter liability rules in some EU countries create compliance risks. Worldfavor helps businesses stay ahead of evolving local requirements.
• Protecting reputation & trust: Weaker penalties don’t erase investor and consumer scrutiny. Worldfavor ensures transparency, mitigates risks, and safeguards brand reputation.

Book a demo today to see how Worldfavor can support your sustainability journey!

Related blog posts you might like: 

• The EU's Corporate Sustainability Due Diligence (CSDDD) - 2024 updates
  
• What is the EU's Corporate Sustainability Reporting Directive (CSRD)?
  
• Due Diligence explained: a guide to responsible business conduct (RBC)