The EU's Omnibus Proposal: A Deep Dive

What Is the EU Omnibus Proposal?

The EU Omnibus Proposal is a new legislative package designed to simplify sustainability regulations for businesses operating in the European Union. In simple terms, this means that companies will have less paperwork, fewer reporting obligations, and more time to comply with sustainability rules.

The European Commission introduced this proposal because many businesses—especially small and medium-sized enterprises (SMEs)—have been struggling with complex reporting requirements under existing EU laws. Many companies don't have the resources or expertise to handle sustainability reporting, which has made compliance time-consuming and expensive.

To fix this, the Omnibus Proposal focuses on three main goals:

1. Reducing administrative burdens – Simplifying sustainability reporting so that businesses don't waste time and money on unnecessary paperwork.

2. Postponing compliance deadlines – Giving companies more time to prepare for new sustainability rules.

3. Making reporting more flexible – Adjusting the rules so that only the largest companies need to provide detailed sustainability reports, while others can choose to report voluntarily.

Why Does This Matter to Businesses?

For many businesses, especially mid-sized companies and SMEs, sustainability regulations have felt overwhelming. Too much reporting, too many data points, and too many new rules made compliance difficult. The Omnibus Proposal fixes this by removing some reporting obligations altogether and simplifying the process for companies that still need to report.

Key Reforms in Sustainability Reporting (CSRD & EU Taxonomy)

One of the biggest changes in the Omnibus Proposal is the simplification of sustainability reporting. Right now, many businesses in the EU must report detailed information about their environmental and social impact under the Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy. However, these requirements have been too complex and expensive, especially for small and mid-sized companies.

1. Fewer Companies Need to Report

Before this proposal, the CSRD required a large number of businesses to publish detailed sustainability reports. This meant that even mid-sized companies had to hire experts, collect lots of data, and follow strict rules.

Now, the Omnibus Proposal exempts 80% of companies from mandatory reporting. This means that only the largest companies—those with more than 1,000 employees—will have to provide detailed sustainability reports.

For smaller companies, reporting will now be voluntary instead of mandatory. This allows businesses to share sustainability data only if they choose to, rather than being forced to follow strict EU rules.

2. More Time to Prepare for New Rules

The EU recognizes that businesses need time to adjust to new sustainability regulations. That’s why the Omnibus Proposal postpones the deadlines for CSRD compliance.

• Companies that were originally required to report in 2026 now have until 2028.

• Listed SMEs (small and medium-sized enterprises) that were supposed to start reporting in 2027 can now opt out completely.

3. Simpler and More Flexible Reporting

For companies that still need to report, the Omnibus Proposal makes the process much easier.

• No more sector-specific reporting – Before, businesses in different industries had to follow specific sector-based reporting rules. These have now been removed to make reporting simpler.

• A new materiality threshold – This means that businesses only need to report on sustainability topics that actually impact them. This change cuts reporting complexity by 70%.

• Less frequent updates – Businesses won’t have to update their reports as often, reducing administrative workload.

Changes to Due Diligence (CSDDD) and Supply Chain Compliance

Another major part of the Omnibus Proposal is the simplification of supply chain due diligence rules. These rules come from the Corporate Sustainability Due Diligence Directive (CSDDD), which requires companies to identify and address human rights and environmental risks in their supply chains.

The problem? The original CSDDD rules were too complex, requiring businesses to track every supplier, subcontractor, and indirect business partner. This was expensive and nearly impossible, especially for companies working with large global supply chains.

The Omnibus Proposal fixes this by:

1. Limiting due diligence to direct business partners only

2. Reducing how often companies must check compliance

3. Protecting smaller suppliers from unnecessary reporting pressure

1. Due Diligence Now Applies Only to Direct Business Partners

Before this proposal, companies were required to check every single link in their supply chain, including indirect suppliers and even third-party vendors they had little control over.

Now, businesses will only be responsible for their direct business partners. This means they do not have to investigate every supplier’s supplier, making compliance much more manageable.

2. Less Frequent Due Diligence Checks

Previously, companies had to monitor supply chain compliance every year. The Omnibus Proposal changes this by allowing companies to submit due diligence reports once every five years unless serious risks are found.

3. Protecting SMEs from Indirect Reporting Pressure

A major concern was that large companies were forcing smaller suppliers to provide excessive data just to meet compliance requirements. The Omnibus Proposal stops this trickle-down effect by limiting how much information large firms can demand from their smaller business partners.

This is a big win for small businesses, which no longer have to spend extra time and money just to meet large corporations’ reporting demands.

Carbon Border Adjustment Mechanism (CBAM) Simplifications

The Carbon Border Adjustment Mechanism (CBAM) is a system designed to put a price on carbon emissions for imported goods. The idea is to prevent companies from moving production to countries with weaker environmental regulations to avoid paying carbon costs in the EU.

However, CBAM’s original design made compliance difficult for small and mid-sized businesses, particularly for importers dealing with complex emissions tracking and reporting.

The Omnibus Proposal simplifies CBAM by:

1. Exempting small importers from reporting and carbon pricing requirements

2. Simplifying emissions calculations for businesses that still need to comply

3. Strengthening anti-circumvention rules to ensure fair competition

1. Small Importers Are Now Exempt from CBAM

One of the biggest changes is that most small importers will no longer need to comply with CBAM rules.

Under the new exemption, companies importing less than 50 tonnes of CBAM-covered goods per year will no longer have to:

• Track emissions from their imports

• Report carbon data to the EU

• Pay for CBAM certificates

This exemption removes 90% of small importers from CBAM requirements, allowing them to continue operations without added costs and bureaucracy.

For businesses that import larger amounts, CBAM reporting is still required, but with simpler rules.

2. Easier Carbon Emissions Calculations

For companies that still fall under CBAM, emissions tracking has been simplified to reduce complexity.

• Default emissions values will now be available, so companies won’t need to track precise emissions for every imported product.

• Businesses will have the option to use pre-set carbon intensity figures based on industry averages instead of conducting complex emissions calculations.

This change reduces paperwork while still ensuring that carbon pricing is fair.

3. Stronger Anti-Circumvention Rules

One concern with CBAM was that companies might try to avoid carbon costs by:

• Splitting shipments into smaller batches to stay under the 50-tonne exemption limit

• Importing CBAM-covered goods through third countries to avoid EU rules

The Omnibus Proposal closes these loopholes by:

• Preventing companies from artificially splitting shipments to bypass the exemption

• Ensuring that goods imported through third countries are still subject to CBAM if their emissions exceed the limit

Financial Benefits and Investment Opportunities

One of the biggest advantages of the Omnibus Proposal is that it doesn’t just reduce compliance burdens—it also creates financial benefits for businesses. EU estimates that this proposal will save businesses billions of euros in administrative costs and unlock new investment opportunities.

One of the main reasons businesses have struggled with sustainability regulations is the high cost of compliance. Collecting data, hiring consultants, and meeting strict reporting deadlines costs businesses time and money.

By simplifying reporting and reducing who needs to comply, the Omnibus Proposal is expected to save companies across the EU up to €6.3 billion every year.

InvestEU program

The Omnibus Proposal also aims to unlock investment opportunities by making EU funding programs more accessible. The InvestEU program, which provides financial support for businesses investing in sustainable projects, will now be easier to access.

This means that:

• More companies will qualify for low-interest loans and grants for sustainability projects

• Investment in clean technologies and energy efficiency will increase

• Financial institutions will face less paperwork when approving funding for sustainability-related projects

Cost savings for SMEs

Small and medium-sized businesses (SMEs) often struggle the most with complex regulations because they don't have the legal teams or resources that large corporations do.

To help, the Omnibus Proposal includes €350 million in cost savings specifically for SMEs by:

• Reducing loan and funding application requirements

• Simplifying sustainability compliance rules

• Removing unnecessary reporting burdens

What Businesses Should Do Now

With all the changes introduced by the Omnibus Proposal, businesses need to adjust their sustainability strategies to take advantage of the new, simplified rules. While compliance requirements are being eased, companies should still be proactive in understanding how these changes affect them.

1. Check if You Still Need to Report Under CSRD

• Confirm your company size – If your business has fewer than 1,000 employees, you may no longer need to report.

• If you are still in scope, check the new deadlines – Reporting deadlines have been postponed to 2028 for many companies.

• Decide if voluntary reporting is beneficial – Even if your company is exempt, some businesses may choose to continue sustainability reporting to attract investors or meet customer expectations.

2. Review Your Supply Chain Due Diligence Obligations

• Check if your suppliers are direct or indirect – You no longer need to monitor every supplier in the chain, just your direct business partners.

• Adjust compliance schedules – If you were preparing for annual reporting, you can now reduce the frequency to once every five years.

• Inform smaller suppliers – If you work with SMEs, let them know they are no longer required to submit detailed sustainability reports unless absolutely necessary.

3. Determine if CBAM Still Applies to Your Imports

• Check how much CBAM-covered material you import annually – If it’s under 50 tonnes, you are now exempt from reporting and carbon pricing.

• If you still need to comply, simplify emissions tracking – Businesses can now use standard emissions values instead of tracking exact emissions.

• Ensure compliance with new anti-circumvention rules – If you previously split shipments to stay below CBAM thresholds, be aware that the EU is cracking down on this practice.

4. Explore New Funding Opportunities

• Look into the InvestEU program – This program now has fewer application barriers, making it easier to get funding.

• Check if you qualify for sustainability incentives – Many energy efficiency and clean technology projects now have easier access to financial support.

• Speak with banks and financial institutions – With less red tape, financing for sustainability projects may now be faster and more accessible.

Closing Insights

The Omnibus Proposal is a significant shift in EU sustainability regulations, making it easier for businesses to comply with rules, reduce costs, and access funding. Instead of overloading companies with complex reporting requirements, the EU is now focusing on practical, business-friendly solutions.

The bottom line is that the EU is recognizing the realities of business operations and making sustainability compliance more achievable and less costly.

Overall, the Omnibus Proposal is a win for businesses, making sustainability compliance simpler, cheaper, and more flexible while still supporting the EU’s long-term environmental goals.