The European Union is preparing to revamp its sustainability regulations under the Omnibus Simplification Package, aiming to reduce the ESG reporting burden on businesses while maintaining transparency and accountability. This initiative will impact three core policies under the EU Green Deal the EU Taxonomy, Corporate Sustainability Reporting Directive (CSRD), and Corporate Sustainability Due Diligence Directive (CSDDD) which were designed to align corporate operations with the carbon neutral strategy. A leaked version of the proposal suggests changes that could relax compliance obligations, extend reporting timelines, and adjust due diligence requirements. 

The EU Taxonomy, introduced in 2020, classifies sustainable business activities, guiding investors toward green economic practices. The CSRD, which took effect in 2023, mandates greenhouse gas (GHG) emissions disclosures and other sustainability data from corporations. Large companies will begin reporting in 2025, with small to medium enterprises (SMEs) and non-EU businesses following in 2026. The CSDDD, adopted in 2024, holds businesses accountable for ESG violations in their supply chains but faced pushback from industry leaders before its approval. 

European Commission President Ursula von der Leyen has emphasized the need for “proportionality” in compliance, suggesting that mid-sized companies could see reduced reporting obligations, extended deadlines, and adjustments to Scope 3 emissions disclosures. The changes could also allow voluntary sustainability reporting for SMEs and limit the legal liabilities companies face under the CSDDD. 

While businesses welcome the relief, sustainability advocates caution that excessive deregulation could weaken Europe’s leadership in sustainable finance. Maintaining ESG transparency is essential to attracting green investments and ensuring Europe stays aligned with its carbon neutral strategy and Paris Agreement goals. 

With the official release scheduled for February 26, the Omnibus reform will shape the future of corporate ESG reporting, balancing regulatory efficiency with sustainability commitments. 

Sources: 

https://www.forbes.com/sites/jonmcgowan/2025/02/22/the-future-sustainability-reporting-in-the-eu-after-the-omnibus/  

https://www.reuters.com/sustainability/eu-pare-back-sustainability-rules-companies-draft-shows-2025-02-22/