The Omnibus Simplification Package: A Necessary Reform or a Setback for EU Sustainability?

The Omnibus Simplification Package: A Necessary Reform or a Setback for EU Sustainability?

The European Commission’s Competitiveness Compass is planning to introduce a series of policy shifts aimed at enhancing Europe’s economic resilience. Among these, the Omnibus Simplification Package stands out as a major regulatory overhaul, designed to ease the compliance burden for businesses while maintaining the EU’s long-term sustainability commitments.

By streamlining CSRD (Corporate Sustainability Reporting Directive), CSDDD (Corporate Sustainability Due Diligence Directive), and the EU Taxonomy, Omnibus aims to simplify sustainability reporting, reduce administrative costs, and enhance the EU’s global competitiveness. But does it strike the right balance between efficiency and environmental accountability?

Why the Omnibus Matters

The Omnibus Package is not just about technical adjustments—it reflects a broader debate on Europe’s economic and environmental future. Over the last two decades, the EU has struggled to match the productivity growth of other major economies, and businesses have increasingly raised concerns over regulatory complexity, high compliance costs, and lack of investor engagement.

To address these challenges, the European Commission’s Competitiveness Compass outlines a roadmap to position Europe as a leader in future technologies, services, and clean products—while maintaining its ambition to become the first climate-neutral continent.

Simpliyfing sustainability reporting and reducing administrative burden related to Green Deal regulations is a part of this roadmap. The European Commission is expected to proposed significant adjustments to key sustainability regulations, including CSRD, EU Taxonomy, and CSDDD. The proposed changes aim to:

• Reduce reporting burdens by at least 25% for large firms and 35% for SMEs, making sustainability compliance less resource intensive.

• Introduce a new "small mid-cap" category, allowing medium-sized companies to operate under less stringent reporting requirements.

• Streamline redundant data points and overlapping directives, making sustainability reporting more efficient and accessible.

While these changes are positioned as a necessary competitiveness boost, they raise critical questions about the long-term integrity of sustainability reporting and the EU’s climate objectives.

Reducing Compliance Complexity for Businesses

A frequent criticism of CSRD, CSDDD, and the EU Taxonomy has been that their overlapping requirements create unnecessary administrative burdens. The simplyfication package will aim to to:

• Reduce Redundancies: Identifying and eliminating overlapping requirements within key regulations such as the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy Regulation.  

• Enhance Clarity: Providing clearer guidance to companies on their reporting obligations, thereby reducing complexity and making compliance more straightforward.

• Maintain High Standards: The Commission claims that  simplification efforts do not compromise the quality and comprehensiveness of sustainability disclosures, thereby upholding the EU's environmental and social objectives. The reality of this, however, remains to be seen.

These changes could help businesses implement sustainability frameworks more effectively while making sustainability reporting more practical and structured.

Aligning Sustainability with Economic Growth

One of the core objectives of the Competitiveness Compass is to ensure that sustainability and economic growth go hand in hand. By simplifying CSRD, CSDDD, and EU Taxonomy compliance, the Omnibus Package:

• Encourages investment in green innovation by reducing excessive reporting burdens.

• Supports energy-intensive industries (such as steel, metals, and chemicals) with a more predictable regulatory framework, ensuring their transition to cleaner production methods is not hindered by bureaucracy.

• Provides greater flexibility for companies to integrate sustainability into their business strategies rather than treating it as a rigid compliance requirement.

If implemented correctly, Omnibus could strengthen the EU’s role as a leader in sustainable finance and responsible business practices without stifling economic growth.

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Does Omnibus Weaken Sustainability?

One of the biggest concerns from sustainability advocates—including major corporations themselves—is that reducing reporting obligations may dilute transparency and comparability.

• Potential removal of mandatory Scope 3 reporting (if E1 is material) could reduce supply chain accountability.

• Sector-specific standards may be scaled back, making ESG data less comparable across industries.

• Weakening of CSDDD could make due diligence on human rights and environmental risks less enforceable.

If Omnibus scales back key reporting elements, it could make greenwashing easier and reduce the quality of sustainability disclosures. Understanding companies’ sustainability performance and creating benchmarks that signal if a company is performing better or worse than its peers will also become much harder without the wealth of data standardized ESG reporting would bring.  

Finding the Right Balance: How Omnibus Should Proceed

For the Omnibus Simplification Package to truly improve CSRD, CSDDD, and EU Taxonomy reporting, it should focus on:

• Fixing IG3’s overcomplicated breakdown, streamlining data points without losing reporting integrity.

• Clarifying CSRD audits—creating one simple assurance framework for auditors, rather than leaving companies guessing.

• Providing real guidance on implementation, including sector-specific templates and clear case studies.

• Maintaining key due diligence principles, ensuring that supply chain accountability remains intact.

Progress or Compromise?

The Omnibus Simplification Package represents a pivotal moment for the future of EU sustainability regulation. While it offers legitimate improvements in efficiency, there is a real risk that it undermines the progress achieved through CSRD, CSDDD, and the EU Taxonomy.

As Europe seeks to balance competitiveness with sustainability, the key question remains: Can simplification be achieved without weakening the EU’s climate commitments?

With the Omnibus Simplification Package set to be published on February 26, its impact on CSRD, CSDDD, and EU Taxonomy remains a key discussion point. Join our webinar on February 27 to explore what’s changing and what businesses need to know.

What are your thoughts? Is Omnibus a necessary efficiency fix, or could it roll back transparency and sustainability progress?