On February 26th, the European Commission formally announced the Omnibus Package, a combination of policy proposals aimed at simplifying corporate sustainability and investment-related regulations, reducing administrative burdens, and promoting green transformation and competitiveness. This policy package covers the CSRD, CSDD, CBAM and the revision of InvestEU regulations, which is expected to save 6.3 billion euros in administrative costs for enterprises every year and leverage 50 billion euros in new investments.
In recent years, in the face of the dual challenges of global climate change and economic transformation, the EU has been committed to achieving low-carbon goals while maintaining economic competitiveness. The omnibus package was introduced under the guidance of the European Green Deal and the Clean Industry Agreement, and its core objectives are:
● Reducing administrative burdens: By fine-tuning reporting and due diligence requirements, especially for large companies, it is expected that nearly 80% fewer companies will be subject to mandatory reporting and that the content and frequency of reporting will be significantly simplified.
● Protecting Small and Medium-sized Enterprises (SMEs): By developing a voluntary reporting standard for SMEs (based on the VSME standard developed by EFRAG), large enterprises are prevented from transmitting excessive compliance requirements to downstream SMEs in the supply chain, and avoiding information overload.
● Unlocking investment potential: optimize the operational mechanisms of InvestEU and other financial instruments to mobilize more public and private capital to support the EU's strategic positioning in the areas of competitiveness, technological innovation and green transformation.
Main adjustments
1. Optimization of the Corporate Sustainability Reporting Directive (CSRD)
● Scope reduction: The new proposal will limit mandatory reporting to large enterprises with more than 1,000 employees, taking about 80% of enterprises out of the reporting scope and reducing the compliance burden on SMEs.
● Delayed Reporting Timeline: For some enterprises that were originally scheduled to report for the first time in 2026 and 2027, the implementation has been postponed to 2028 to allow more time for enterprises to prepare and adjust their internal processes.
● Voluntary Reporting Mechanism: For enterprises not covered by mandatory reporting, a voluntary reporting system based on the SME standard will be introduced through a delegated act, which will satisfy the market's demand for sustainability information while avoiding excessive information disclosure.
2. Adjustments to the Corporate Sustainability Due Diligence Directive (CSDD)
● Streamlining the due diligence process: the new program focuses on direct business partners and will significantly simplify the collection of information on indirect supply chains, while extending the regular inspection cycle from annual to five years, with interim assessments when necessary.
● Limitations on information requests: Limitations will be placed on requests for information from smaller businesses in the supply chain to ensure that these businesses are not overburdened by the due diligence obligations of larger businesses.
3. Carbon Border Adjustment Mechanism (CBAM) simplification
● Exemption for small importers: the establishment of a 50-ton annual import threshold exempts approximately 90% of small importers from CBAM reporting obligations, ensuring that more than 99% of emissions are captured.
● Process optimization: for companies still subject to CBAM obligations, simplification of the declaration, emission accounting and reporting requirements, as well as strengthening of anti-circumvention measures to ensure the long-term effectiveness of the mechanism.
4. Reform of InvestEU regulation
● Increased efficiency in the use of funds: by optimizing the linkage mechanism of existing financial instruments (e.g. EFSI, CEF debt instruments, etc.), new guarantee lines and reuse of funds, it is expected to activate investments of about €50 billion.
● Reduced administrative requirements: For implementing agencies and SMEs, the frequency and content of reporting will be reduced, saving around €350 million in costs and allowing more resources to be used to support innovation and green projects.
This series of revision initiatives has caused extensive discussions in the industry. Supporters believe that lowering the scope of reporting and delaying the implementation deadline will help enterprises save costs and ease the pressure of internal organizational adjustments, thus enhancing the global competitiveness of European enterprises. Ursula von der Leyen, President of the European Commission, emphasized in a press conference that “we will never give up the 2050 net-zero emissions target, but we must enable companies to achieve this goal while remaining economically viable”.
However, opposition is equally strong. Some environmental organizations, investors, and some European parliamentarians have pointed out that the move could weaken the transparency of ESG information and corporate accountability mechanisms, leading to a lack of sufficient environmental, social and governance (ESG) data in the market, which could affect the effectiveness of responsible investment. In addition, some multinational companies have already invested heavily in the upcoming CSRD and CSDD reports, and the new delays and adjustments may expose their upfront investment to policy uncertainty.
The streamlining of EU regulations is not “deregulation”, but rather an attempt to strike a balance between sustainable development and economic growth through precise measures. Von der Leyen emphasized: “Our goal remains the same, but the approach is smarter.” For businesses, this is both an opportunity to reduce burdens and a clarion call to accelerate the green transition.
Author: Qinger
