The European Commission’s Omnibus Simplification Package calls for far-reaching changes to sustainability reporting across the EU. With the potential to delay CSDDD enforcement, raise CSRD thresholds and reduce regulatory burdens for thousands of firms, the legislation will undoubtedly influence corporate sustainability priorities. However, it is still a proposal: the Omnibus package must still undergo thorough review and approval as part of the EU legislative process, which could take some time.
This leaves sustainability leaders facing uncertainty, even as some stakeholders continue to demand consistent, investment-grade sustainability data. To get ahead of the curve – and get ready to embrace the opportunities offered by the Omnibus Proposal – firms need answers to their most pressing questions:
How does the Omnibus impact non-EU-based companies with significant operations in the EU?
The most significant impact for firms based outside of the EU – but which have a significant footprint in the EU – will be their obligation to report under the CSRD. Originally, CSRD requirements mandated that non-EU firms with over €150 million in turnover in the EU report on 2028 data in 2029; the Omnibus would raise this threshold to firms with over €450 million. Non-EU firms that were subject to the initial CSDDD requirements will still be considered in scope under the Omnibus, and will have to comply with the amended timeline and due diligence requirements. It is currently unclear, however, if this will all stick. For example, officials in the US recently proposed the PROTECT USA Act, which aims to limit the extent of the CSDDD, although this is still in the early stages.
Does the Omnibus change the requirement to produce a climate transition plan?
The Omnibus proposal lessens requirements around climate transition plans. Under the CSDDD, firms must adopt and “put into effect” a transition plan for climate change mitigation. The Omnibus proposal removes the requirement for organizations to put the transition plan into effect. The European Commission has not clarified what this means in practice.
What are you hearing from the EU on timing for acceptance of the proposal and adoption? Will it be adopted in full or just pieces?
Currently, the Omnibus is still a proposal and must undergo six stages of review and approval as part of the EU legislative process – which could take well over a year! However, the European Parliament is expected to vote on April 1 on whether it will fast-track this review process. We therefore hope to have more clarification in the first week of April on when and what in the Omnibus proposal will be adopted. This is a fast-moving issue, and we’ll continue to follow it closely.
Do you expect to see mentions of double materiality increase in sustainability reports this year?
In short – yes, we expect to see more organizations adopt double materiality assessment (DMA) as their de facto approach to materiality. We expect this for two reasons: firms are still reporting in line with standards such as CDP, GRI and ISSB, with each taking a different stance on materiality. By conducting a DMA, organizations simultaneously consider both impact and financial materiality, making it easier to streamline reporting requirements alongside the CSRD. Additionally, firms will realize the value of DMA as a proactive management tool to provide a full view into their sustainability-related impacts, risks and opportunities – even if they aren’t immediately covered by the CSRD.
For more on the implications of the EU Omnibus Proposal, read the Verdantix report Strategic Focus: Unpacking The EU Omnibus And Its Impact On Sustainability Software.
