The EU Omnibus revises four key regulatory frameworks: the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the Taxonomy Regulation. It also adjusts the Carbon Border Adjustment Mechanism (CBAM).
Defined Terms
- CSRD: the Corporate Sustainability Reporting Directive requires in-scope entities to report on the impact of their corporate activities on the environment and society by using a double materiality assessment; (i) financial materiality and (ii) impact materiality
- CSDDD: the Corporate Sustainability Due Diligence Directive requires in-scope entities to assess and address environmental and human rights risks in their value chains
- The Taxonomy Regulation: is a classification system for in-scope entities’ economic activities to determine whether such activities qualify as “sustainable”. Activities must be measured against six environmental objectives to understand whether they “substantially contribute” to any one objective while not doing any significant harm to the other objectives. The resulting alignment is intended to reduce unsubstantiated sustainability claims and limit greenwashing.
- CBAM: the Carbon Border Adjustment Mechanism, a fair-pricing tool for carbon-intensive imports to promote competitiveness of EU companies subject to strict emissions regulations in their operations.
Summary of Changes:
Directive/Regulation | Criteria | Original Requirement | Omnibus Proposal |
|---|---|---|---|
CSRD | Employee Threshold | Companies with >250 employees | Companies with >1,000 employees |
Non-EU Turnover Threshold | >EUR150M Turnover | >EUR450M Turnover | |
Implementation | Wave 2 and 3 companies reporting in 2026 and 2027 | Wave 2 and 3 companies reporting in 2028 and 2029 | |
Assurance Requirements | “Reasonable assurance” to be phased in | “Limited assurance” is sufficient | |
Sector-Specific Standards | Sector-specific standards to be drafted | Eliminates requirement for sector-specific standards | |
Materiality | Double materiality assessment required | No change | |
CSDDD | Implementation | Initial compliance: 2027 | Initial compliance: 2028 |
Scope of Assessment | Value chain | Direct suppliers only | |
Monitoring | Annual monitoring | Monitoring ~every five years | |
Contract Management | Terminate contracts with suppliers in violation of standards | Suspend contracts with suppliers in violation of standards, and attempt remediation | |
Penalties | >5% of global turnover | No universal penalties | |
EU Taxonomy | Turnover Threshold | Mandatory for all companies reporting to CSRD | Companies reporting to CSRD with >EUR450M turnover |
CBAM | Scope | All importers included | Small importers exempt (~90% reduction in reporters, 1% reduction in emissions) |
Next Steps:
The EU Omnibus, if passed, will significantly reduce the regulatory burden for in-scope entities. Now, the proposal must be approved by the European Parliament and Council.
As of today, the changes outlined here are not in effect, and deadlines for reporting under the current regulatory framework remain in play. However, expedited review and approval for the delay to implementation has been requested.
We will be watching the updates and announcements closely, and we welcome you to get in touch with us at [email protected].