Ominbus: EU Commission simplifies rules on sustainability and EU investments

Brussels, 26 February 2025

The European Commission has adopted a new package of proposals to simplify EU rules, boost competitiveness, and unlock additional investment capacity. This is a major step forward in creating a more favourable business environment to help EU companies grow, innovate, and create quality jobs.

By bringing our competitiveness and climate goals together, we are creating the conditions for EU businesses to thrive, attract investment, achieve our shared goals – such as the European Green Deal objectives – and unlock our full economic potential.

The Commission has a clear target to deliver an unprecedented simplification effort, by achieving at least 25% reduction in administrative burdens, and at least 35% for SMEs until the end of this mandate. These first ‘Omnibus’ packages, bringing together proposals in a number of related legislative fields, cover a far-reaching simplification in the fields of sustainable finance reporting, sustainability due diligence, EU Taxonomy, carbon border adjustment mechanism, and European investment programmes.

These proposals will reduce complexity of EU requirements for all businesses, notably SMEs and small mid-caps, focus our regulatory framework on the largest companies which are likely to have a bigger impact on the climate and the environment, while still enabling companies to access sustainable finance for their clean transition.

If adopted and implemented as set out today, the proposals are conservatively estimated to bring total savings in annual administrative costs of around €6.3 billion and to mobilise additional public and private investment capacity of €50 billion to support policy priorities.

President Ursula von der Leyen said: “Simplification promised, simplification delivered! We are presenting our first proposal for far-reaching simplification. EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy. This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way”.

Making sustainability reporting more accessible and efficient

Specifically, the main changes in the area of sustainability reporting (CSRD and EU Taxonomy) will:

• Remove around 80% of companies from the scope of CSRD, focusing the sustainability reporting obligations on the largest companies which are more likely to have the biggest impacts on people and the environment;
• Ensure that sustainability reporting requirements on large companies do not burden smaller companies in their value chains;
• Postpone by two years (until 2028) the reporting requirements for companies currently in the scope of CSRD and which are required to report as of 2026 or 2027.
• Reduce the burden of the EU Taxonomy reporting obligations and limit it to the largest companies (corresponding to the scope of the CSDDD),  while keeping the possibility to report voluntarily for the other large companies within the future scope of the CSRD. This is expected to deliver significant cost savings for smaller companies, while allowing businesses that wish to access sustainable finance to continue that reporting.
• Introduce the option of reporting on activities that are partially aligned with the EU Taxonomy, fostering a gradual environmental transition of activities over time, in line with the aim to scale up transition finance to help companies on their path towards sustainability.
• Introduce a financial materiality threshold for the Taxonomy reporting and reduce the reporting templates by around 70%.
• Introduce simplifications to the most complex “Do no Significant harm” (DNSH) criteria for pollution prevention and control related to the use and presence of chemicals that apply horizontally to all economic sectors under the EU Taxonomy – as a first step in revising and simplifying all such DNSH criteria.
• Adjust, among others, the main Taxonomy-based key performance indicator for banks, the Green Asset Ratio (GAR). Banks will be able to exclude from the denominator of the GAR exposures that relate to undertakings which are outside the future scope of the CSRD (i.e. companies with less than 1000 employees and €50m turnover).

Simplifying due diligence to support responsible business practices

The main changes in the area of sustainability due diligence will:

• Simplify sustainability due diligence requirements so that companies in scope avoid unnecessary complexities and costs, e.g. by focusing systematic due diligence requirements on direct business partners; and by reducing the frequency of periodic assessments and monitoring of their partners from annual to 5 years, with ad hoc assessments where necessary.
• Reduce burdens and trickle-down effects for SMEs and  and small mid-caps by limiting the amount of information that may be requested as part of the value chain mapping by large companies;
• Further increase the harmonisation of due diligence requirements to ensure a level playing field across the EU;
• Remove the EU civil liability conditions while preserving victims’ right to full compensation for damage caused by non-compliance, and protecting companies against over-compensation, under the civil liability regimes of Member States; and
• Give companies more time to prepare to comply with the new requirements by postponing the application of the sustainability due diligence requirements for the largest companies by one year (to 26 July 2028), while advancing the adoption of the guidelines by one year (to July 2026).

Simplifying the carbon border adjustment mechanism (CBAM) for a fairer trade

The main changes on CBAM will:

• Exempt small importers from CBAM obligations, mostly SMEs and individuals. These are importers who import small quantities of CBAM goods, representing very small quantities of embedded emissions entering the Union from third countries. This works by introducing a new CBAM cumulative annual threshold of 50 tonnes per importer, thus eliminating CBAM obligations for approximately 182,000 or 90% of importers, mostly SMEs, while still covering over 99% emissions in scope.
• Simplify the rules for companies that remain in CBAM scope: on authorisation of CBAM declarants, as well as the rules related to CBAM obligations, including the calculation of embedded emissions and reporting requirements.
• Make CBAM more effective in the long term, by strengthening the rules to avoid circumvention and abuse.
• This simplification precedes a future extension of CBAM to other ETS sectors, downstream goods, followed by new legislative proposal on the scope extension of CBAM in early 2026.

Unlocking investment opportunities

The Commission is also proposing a series of amendments to simplify and optimise the use of several investment programs including InvestEU, EFSI, and legacy financial instruments.

InvestEU, the EU’s largest risk-sharing instrument to support priority investments within the Union, plays a key role in addressing financial barriers and driving the investments needed for competitiveness, research and innovation, decarbonisation, environmental sustainability and skills. Currently, close to 45 % of its operations are supporting climate objectives.

The proposed changes:

• Increase the EU’s investment capacity through the use of returns from past investments, as well as optimised use of funds still available under the legacy instruments, thus allowing for more funding to be made available to businesses. This is expected to mobilise around €50 billion in additional public and private investments. The increased InvestEU capacity will be mainly used to finance more innovative activities in support of priority policies, such as the Competitiveness Compass and the Clean Industrial Deal.
• Make it easier for Member States to contribute to the programme and support their own businesses and mobilise private  investments.
• Simplify administrative requirements for our implementing partners, financial intermediaries and final recipients, notably SMEs. The simplification measures proposed are expected to generate €350 million in cost savings.

Next steps

The legislative proposals will now be submitted to the European Parliament and the Council for their consideration and adoption. The changes on the CSRD, CSDDD, and CBAM will enter into force once the co-legislators have reached an agreement on the proposals and after publication in the EU Official Journal. In line with the Communication on simplification and implementation published on 11 January 2024, the Commission invites the co-legislators to treat this omnibus package with priority, in particular the proposal postponing certain disclosure requirements under the CSRD and the transposition deadline under CSDDD, as they aim to address key concerns identified by stakeholders.

The draft Delegated Act amending the current delegated acts under the Taxonomy Regulation will be adopted after public feedback and will apply at the end of the scrutiny period by the European Parliament and the Council.

More information

• Get a detailed breakdown of the key simplifications and their impact on the Commission’s Q&A.
• Read the full Commission proposals (Omnibus 1 | Omnibus 2) to understand the legal changes introduced.
• Explore the Commission Staff Working Documents (1 and 2) for a detailed analysis of the rationale and expected impact of the simplification measures.
• A Call for Evidence has been open on the Taxonomy Delegated Acts

Quote(s)

Simplification promised, simplification delivered! We are presenting our first proposal for far-reaching simplification. EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy. This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way.

Ursula von der Leyen, President of the European Commission

We are taking concrete steps to cut red tape and make EU rules more accessible and effective for citizens and businesses. Today’s package is the first step of our far-reaching simplification efforts across all sectors of legislation. We can show that Europe is not only an incredible market to invest, produce, sell and consume but also a simple market. This proposal delivers real simplifications—less administrative burden, easier access to funding, and clearer, more predictable rules. We keep our objectives but change the way to better achieve them.

Stéphane Séjourné, Executive Vice-President for Prosperity and Industrial Strategy

Implementation and Simplification: ‘The world is changing before our eyes. The European Union needs a strong economy to defend its values and achieve its goals at home and around the world. Reducing unnecessarily complex EU rules is a vital part of our plan to make Europe more competitive. This simplification agenda is not about deregulation. It is about achieving our goals in a smarter and less burdensome way, so that our companies, and especially our SMEs, can focus on growth, jobs, innovation, and helping us secure the green and digital transitions. Today we take an important first step in that direction.

Valdis Dombrovskis, Commissioner for Economy and Productivity; Implementation and Simplification

We are defining a path towards a more growth-friendly, more usable and proportionate EU sustainable finance rules. By facilitating a more conducive business environment, we can drive growth and EU’s competitiveness, attract investments, and continue to deliver on our Green Deal objectives. It’s about striking the right balance between reducing excessive administrative burden and keeping our longer-term goals in focus, because I firmly believe that sustainability is a key competitive advantage.

Maria Luís Albuquerque, Commissioner for Financial Services and the Savings and Investments Union

We are significantly simplifying compliance for large companies, while upholding the core objective of the CSDDD to prevent companies from indirectly contributing to exploitative business practices, harming human rights, the climate, or the environment through their value chains. We also ensure smaller business partners are not burdened by excessive information requests. By striking this balance, we hold companies accountable for their actions and at the same time we promote more transparent and responsible business operations globally.

Michael McGrath, Commissioner for Democracy, Justice, the Rule of Law and Consumer Protection

Today, we’re making it simpler to do business in Europe. By simplifying the Carbon Border Adjustment Mechanism (CBAM), we’re empowering companies to reduce their carbon footprint without compromising their competitive edge. While exempting around 90% of companies from CBAM reporting, we still ensure the capture of over 99% of emissions. This marks the first step in a broader CBAM review.

Wopke Hoekstra, Commissioner for Climate, Net Zero and Clean Growth

Source – EU Commission

Questions and answers on simplification omnibus I and II

Sustainability Omnibus Overview

1. Why are you proposing this omnibus legislation on sustainability rules?   

The recent Competitiveness Compass sets the vision for strengthening the EU’s competitiveness and making the EU’s economy more prosperous, building on the recommendations of the Draghi report.

To boost our competitiveness and unleash growth, the EU needs to foster a favourable business environment and ensure that companies are not stifled by excessive regulatory burdens. This, in turn, will enable our businesses to grow and create quality jobs, attract investments and get the necessary funds for their transition towards a more sustainable economy and help the EU meet the Green Deal’s ambitious objectives. We need to get the balance right. Today, the Commission is also adopting a Clean Industrial Deal, bringing together climate and competitiveness under an overarching growth strategy.

That is why the Commission is recalibrating some EU rules in a growth-friendly manner that will enable more cost-effective delivery of our policy objectives. The Commission has a clear target to deliver an unprecedented simplification effort, by achieving at least 25% reduction in administrative burdens and at least 35% for SMEs before the end of the mandate.

The Commission’s work programme, published on 11 February, announced a first series of “Omnibus” packages. They will address overlapping, unnecessary or disproportionate rules that are creating unnecessary burden for EU businesses.

Today’s proposals  will provide substantial simplification in the field of sustainability and EU investment programmes. The Commission prioritises efforts in this area in line with the Draghi report, the Competitiveness Compass and the findings of the Commission’s call for evidence in 2023.

The package includes amendments to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the Carbon Adjustment Mechanism (CBAM), and the InvestEu Regulation. The package is accompanied by a draft Taxonomy Delegated Act for public consultation.  The aim is to square the EU’s ambition towards a sustainable transition with enhancing EU companies’ competitiveness.

2. What changes are you proposing today?

Today’s omnibus package includes:

• A proposal for a Directive amending the CSRD and the CSDDD;
• A proposal which postpones the application of all reporting requirements in the CSRD for companies that are due to report in 2026 and 2027 (so-called wave 2 and 3 companies) and which postpones the transposition deadline and the first wave of application of the CSDDD by one year to 2028.
• A draft Delegated act amending the Taxonomy Disclosures and the Taxonomy Climate and Environmental Delegated Acts  subject to public consultation.
• A proposal for a Regulation amending the Carbon Border Adjustment Mechanism Regulation
• A proposal for a Regulation amending the InvestEu Regulation

3. How will companies benefit from this proposal?

Companies across the EU – large and small – will benefit from the simplifications of the omnibus proposals. If adopted and implemented as set out today, the proposals are conservatively estimated to bring total savings in annual administrative costs of around EUR 6.3 billion and to mobilise additional public and private investment capacity of EUR 50 billion to support policy priorities.

Today’s omnibus package will protect SMEs from excessive sustainability information requests that they receive when they are included in the value chains of larger companies or from financial institutions, such as banks, which fall in the scope of the CSRD and the CSDDD. All companies with up to 1,000 employees and 50 million turnover will be outside the scope of the CSRD. For the companies in scope (above 1,000 employees and 50 million turnover ), the Commission will adopt a delegated act to revise and simplify the existing sustainability reporting standards (ESRS). The proposed provisions in CSRD also create a derogation for companies with more than 1,000 employees and a turnover below EUR 450 million by making the reporting of Taxonomy voluntary, and also, put a stronger emphasis on transition finance by introducing the option of reporting on partial Taxonomy-alignment.

While boosting EU companies’ competitiveness by cutting administrative burden, today’s proposal will still allow companies not in the scope of the CSRD to report on sustainability issues if they so wish (voluntary standards for companies not in scope of the CSRD and voluntary EU Taxonomy reporting for companies below a certain threshold).

Simplified due diligence obligations will benefit both the very large companies (including company groups, license and franchise systems) that fall under the scope of the CSDDD (estimated to be about 6000 EU and 900 non-EU companies) and their value chain partners, including SMEs and small midcap companies (i.e. companies with not more than 500 employees). CSDDD amendments such as the extension of maximum harmonisation, the streamlining of stakeholder engagement, and the clarification – and better alignment with the CSRD – of the obligations regarding adoption of transition plans for climate change mitigation will benefit, in particular, the very large companies that fall under the scope.

Additionally, the Commission is also today publishing possible amendments to the Taxonomy Disclosures Delegated Act and the Taxonomy Climate and Environmental Delegated Acts which, among others, simplify the reporting templates, leading to a reduction of data points by almost 70%, introduce a materiality threshold to make disclosure of alignment for companies with less 10% eligible activities not mandatory, introduce the option of reporting partial disclosure to foster transition finance, simplify and make more useful the Green Asset Ratio (GAR) used by banks, reduce the scope for mandatory reporting on operational expenditure and simplify certain ‘Do no significant harm’ (DNSH) criteria.

Regarding CBAM, the main beneficiaries will be the importers of small quantities of CBAM goods, as the proposed new cumulative annual threshold will allow to exempt approximately 90%, 182,000, importers from CBAM obligations, while maintaining the environmental goal of the mechanism by still encompassing more than 99% of the total emissions of the imports across four CBAM sectors (iron and steel, aluminium, cement, fertilisers). And for importers that will still be in scope, we simplify the authorisation of declarants, emissions calculations, reporting requirements and the financial liability.

Finally, amending the InvestEU Regulation, different actors (implementing partners, financial intermediaries, final recipients) in the InvestEU value chain would benefit from reduced reporting and administrative burden. Such simplifications are expected to save around EUR 350 million to those companies while at the same time releasing €50 billion of extra resources in additional public and private investment

4. How does this proposal help achieve the objectives of the Green Deal?

When presenting the Competitiveness Compass in January, President von der Leyen confirmed clearly that we are staying the course with our Green Deal objectives. In Europe, sustainability and competitiveness should go hand in hand. Companies are supportive of our Green Deal objectives but they request us to be pragmatic and simple. The Commission has listened to concerns of stakeholders, who consider that some sustainability reporting and due diligence rules are too complex and costly to implement, and of limited usefulness for investors and others, hindering the EU’s competitiveness and its investment drive. Many companies have highlighted difficulties in applying certain provisions, noting that the accumulation of requirements sometimes leads to unnecessary complexity and costs. Rules designed for larger companies may inadvertently impact SMEs.

By making EU companies’ lives easier and creating a more favourable business environment, the EU can drive growth and quality jobs, boost investments and, ultimately, enable companies to embrace the transition to a sustainable economy in a more effective and pragmatic way. This  makes our rules fit for purpose, more proportionate and also more appealing.

Corporate Sustainability Reporting Directive

5. What are the main changes that the omnibus package is bringing to the CSRD?

The omnibus package will bring several changes to the CSRD, making it more proportionate and easier to implement by companies:

• Reduction of the scope of reporting companies: The reporting requirements would only apply to large undertakings with more than 1000 employees (i.e. undertakings that have more than 1000 employees and either a turnover above EUR 50 million or a balance sheet total above EUR 25 million) This means that the number of companies in scope will be reduced by about 80%. The new scope will be more closely aligned with the key scope thresholds of the CSDDD.
• ‘Value chain cap’: For companies which will not be in the scope of the CSRD any more (up to 1,000 employees ), the Commission will adopt by delegated act a voluntary reporting standard , based on the standard for SMEs (VSME) developed by EFRAG. That standard will act as a shield, by limiting the information that companies or banks falling into the scope of the CSRD can request from companies  in their value chains with fewer than 1,000 employees..
• Commission’s commitment to revise the European Sustainability Reporting standards (“ESRS”): The Commission will revise the delegated act establishing the ESRS, with the aim of substantially reducing the number of data points, clarifying provisions deemed unclear, improving consistency with other pieces of legislation and reducing the number of data points.
• Deletion of sector-specific standards requirement: The proposal will delete the empowerment for the Commission to adopt sector-specific standards.
• Removing the reasonable assurance standard: The proposal is removing the possibility for the Commission to propose moving from a limited assurance requirement to a reasonable assurance requirement.
• Postponement of reporting requirements: Today’s package proposes postponing by two years the entry into application of the reporting requirements for large companies that have not yet started implementing the CSRD and for listed SMEs (Wave 2 and 3) in order to give time to the  co-legislators to agree to the Commission’s proposed substantive changes.

6. What is the scope of the new CSRD?

Currently, the CSRD applies to all large companies (defined as companies above two out of the three following thresholds: €50 million net turnover, €25 million balance sheet total, 250 employees), as well as SMEs whose securities are listed on an EU regulated market. However, many businesses and industry associations have suggested that the Commission should revise the scope by excluding the smaller companies. Mario Draghi’s report on competitiveness also highlighted that the rules would impose a disproportionately high burden on SMEs and small mid-caps than on larger companies.

Today’s proposal will reduce the current scope of the CSRD to large companies with more than 1000 employees (i.e. companies that have more than 1000 employees and either a turnover above EUR 50 million or a balance sheet above EUR 25 million). Those companies will be required to report against the European Sustainability Reporting Standards (ESRS), while these standards will also be revised and simplified.

Companies outside the scope of CSRD (companies with up to 1,000 employees) may choose to report voluntarily on the basis of a simplified voluntary standard to be adopted by the Commission, based on the voluntary standards for SMEs (VSME) developed by EFRAG.

The Commission estimates that the proposal will reduce the number of companies in scope by 80%.

7. What are the main changes that the omnibus package is bringing to the CSDDD?

• Giving companies more time to prepare for implementing the new framework by postponing, by one year, the transposition deadline (26 July 2027) and the first phase of the application of the sustainability due diligence requirements, covering the largest companies (to 26 July 2028). In the meantime, the necessary guidelines by the Commission will be advanced to July 2026, allowing companies to build more on best practices and reduce their reliance on legal counselling and advisory services
• Relieving companies from the obligation to systematically conduct in-depth assessments of adverse impacts that occur or may occur in often complex value chains at the level of indirect business partners and requiring full due diligence with respect to the value chain beyond direct business partner only in cases where the company has plausible information suggesting that adverse impacts have arisen or may arise there;
• Simplify other aspects of sustainability due diligence requirements so that large companies avoid unnecessary complexities and costs, including by prolonging the intervals between two regular periodic assessments and updates from one year to 5 years, while clarifying that a company needs to assess the implementation of its due diligence measures and update them whenever there are reasonable grounds to believe that the measures are no longer adequate or effective; by streamlining the stakeholder engagement obligations; and by removing the obligation to terminate the business relationship as a last resort measure;
• Reducing the trickle-down effect further by limiting the information that companies within scope may request from their SME and small midcap business partners (i.e. companies with not more than 500 employees)  to the information specified in the CSRD voluntary sustainability reporting standards (VSME standard). This limitation applies unless they need additional information to carry out the mapping (for instance on impacts not covered by the standards) and they cannot obtain that information in any other reasonable way.
• Deferring to the various national civil liability regimes by deleting the harmonised EU conditions for civil liability and revoking the obligation for Member States regarding representative actions by trade unions or NGOs. Leaving national law to define whether its civil liability provisions override otherwise applicable rules of the third country where the harm occurs;
• Aligning the requirements on the adoption of transition plans for climate mitigation with the CSRD;
• Extending maximum harmonisation to more provisions regarding core due diligence obligations to better ensure a level playing field across the EU;
• Deleting the review clause on inclusion of financial services in the scope of the due diligence directive.

8. How is the omnibus package protecting SMEs and small mid-caps from excessive sustainability information requests?

SMEs (with the exception of listed SMEs) are currently out of the scope of CSRD. However, in practice, many of them are subject to sustainability information requests when they are included in the value chain of larger companies or from financial institutions, such as banks, which fall within the scope of CSRD.

Today’s proposal will address this “trickle-down” effect by preventing all companies out of scope from being subject to excessive reporting requests. The Commission will adopt a voluntary standard for all companies out of scope, including SMEs, based on the voluntary standard for SMEs (“VSME”) , developed by EFRAG and to be adopted by delegated act.

The VSME voluntary standard will be a simple tool helping companies not in scope  to provide sustainability information to large companies subject to CSRD requirements . The VSME voluntary standard will act as a shield or a “value-chain cap” for those out-of-scope companies. Companies in the scope of the CSRD will not be able to request from companies in their value chain that are out of scope, including SMEs and small mid-caps, information that goes beyond the information set out in the VSME voluntary standard.

According to the proposal, the Commission would adopt the voluntary standard as a delegated act. In the meantime, to address market demand, the Commission intends to issue a recommendation on voluntary sustainability reporting as soon as possible, based on the VSME standard developed by EFRAG.

Similarly, while SMEs and SMCs are not subject to any obligations under the CSDDD, they can be indirectly impacted when large companies need to request information from them to comply with their due diligence obligations.  The proposal will limit the general requests for information for impact mapping that large companies in scope may address to SMEs and SMCs (small midcap companies with up to 500 employees) to information specified in the VSME standard, unless it is necessary for instance because the standard does not cover a relevant impact.

Furthermore, a number of simplification amendments proposed to the CSDDD will alleviate the burden of smaller business partners in the value chain, including reducing due diligence obligations beyond direct business partners and reducing the frequency of the monitoring of the effectiveness of due diligence measures, moving from a yearly assessment to an assessment every 5 years. Those measures will significantly relieve burden for SMEs and SMCs in the value chain of larger companies subject to CSDDD.

9. What are the expected benefits of the proposed modifications to CSRD on companies?

The proposed measures reducing the scope of the CSRD and the reporting requirements for companies remaining in scope, including future changes to the ESRS, will generate significant cost savings for companies and should boost the EU’s competitiveness.

The total annual cost savings of the changes in the CSRD scope and future modifications to the ESRS could be about €4.4 billion. This includes annual cost savings resulting from the reduced scope of  Taxonomy reporting, as a result of the reduced CSRD scope, of €0.8 billion. On top of those recurrent savings, there would be the one-off cost savings in relation to setting up the reporting and assurance processes that would be avoided for exempted firms, which amount to about €1.6 billion in relation to CSRD/ESRS and €0.9 billion for the Taxonomy.

10. What are the expected benefits of the proposed modifications to the CSDDD for companies?

In general, companies will be subject to a sustainability due diligence framework that is less complex and more harmonised, ensuring burden reduction and a level playing field. The most important costs savings are expected to arise as a result of the simplification  of the due diligence obligations with respect to harmful impacts arising at the level of indirect business partners and the less frequent (5-yearly) regular monitoring exercises. In addition, smaller companies in scope will be protected from unnecessary information requests from their large business partners. These savings have been conservatively estimated at €320 million per annum, as well as substantial one-off cost savings.

11. Is the Commission changing the principle of double materiality of the CSRD? 

No. The omnibus proposal does not change the ‘double materiality perspective’, meaning that companies remaining in scope will have to report about how sustainability risks affect their business and about their own impact on people and the environment.

Taxonomy

12. What are the main changes to the Taxonomy ?

The Omnibus package includes, on the one hand, amendments to the CSRD regarding Taxonomy reporting as a derogation to Article 8 Taxonomy Regulation and, on the other hand, the Commission proposes draft amendments to the Taxonomy Disclosures, Climate and Environmental Delegated Acts.

For companies within the future CSRD scope (large companies that have more than 1,000 employees) with a net turnover up to 450 million, the Omnibus proposal envisages voluntary Taxonomy reporting. This will reduce the number of companies that are obliged to report their Taxonomy alignment.

Moreover, companies that have made progress towards sustainability targets, but only meet certain EU Taxonomy requirements, may choose to voluntarily report on their partial Taxonomy-alignment. This enables them to demonstrate their existing efforts and progress towards full alignment and receive recognition for their commitment to sustainability. The Omnibus proposal also mandates the Commission to develop delegated acts to ensure standardisation in terms of the content and presentation of the respective reporting.

The Commission is also publishing for consultation draft amendments to the Taxonomy Disclosures Delegated Act and the Taxonomy Climate and environmental Delegated Acts which:

• simplify the reporting templates, leading to a reduction of data points by almost 70%.
• exempt companies from assessing Taxonomy-eligibility and alignment of their economic activities that are not financially material for their business (e.g. those not exceeding 10% of their total turnover, capital expenditure, or total assets).

Furthermore, we propose amendments to the main key performance indicators of financial institutions, especially the green asset ratio (GAR) for banks. Based on the published text banks will be able to exclude from the denominator of the GAR, exposures that relate to undertakings which are not under the future scope of the CSRD (i.e. companies that are not large undertakings with 1,000 or more employees).

The Commission is also asking for feedback on two alternative options for simplifying the most complex “Do no Significant harm” criteria for pollution prevention and control related to the use and presence of chemicals that apply horizontally to all economic sectors under the EU Taxonomy. In the public consultation, stakeholders are invited to provide feedback to both alternative options.

 CBAM

13. What are the main changes that you are proposing to CBAM?

• The proposed changes simplify processes for businesses and cut red tape.
• The changes will exempt small importers from CBAM obligations, mostly SMEs and individuals. These are importers who import small quantities of CBAM goods, representing very small quantities of embedded emissions entering the EU from third countries.

• We propose measures to simplify the small occasional importations of CBAM goods, below the maximum threshold of 50 tonnes per year. This threshold corresponds to approximately 80 tonnes of CO2 equivalent on average per importer. These importers will no longer be subject to any CBAM obligation.
• For those importers that remain in the CBAM scope, the proposed changes will facilitate compliance with the reporting requirements and aim at simplifying the authorisation of declarants, the calculation of emissions, reporting requirements and compliance with the financial liability.

• This will be coupled with measures making CBAM more effective, by strengthening anti-abuse provisions and developing a joint anti-circumvention strategy together with national authorities.

14. What is the aim of these proposed simplification amendments?

The proposed amendments aim to simplify and strengthen the CBAM mechanism. They aim to spare 90% of concerned companies from reporting requirements, while still covering 99% of the C02 emissions. The proposed simplifications reflect the insights gathered in the transitional period, in place since October 2023. Overall, simplification is key to reducing administrative burden for SMEs and occasional importers. This learning period, during the CBAM transitional phase, has allowed us to develop the policy measures jointly with stakeholders. Simplification is also a precondition to review CBAM and make it stronger and more efficient. Going forward, the next steps will include a full review of CBAM later this year, to assess its potential extension to other ETS sectors, downstream goods, indirect emissions. The Commission will also examine, in this context, how to help exporters of CBAM products at risk of carbon leakage. This will be followed by a legislative proposal in early 2026.

15. What is the formula for determining this new annual mass-threshold?

The formula is set up to determine the level of mass-threshold that would exempt as many importers as possible, while making sure that we capture at least 99% of emissions.To do this, we estimate all emissions of imports that would stay in scope for a given mass-threshold and divide this by all emissions of all importers of CBAM goods.

Step 1: We count all emissions of all importers of CBAM goods.

Step 2: We find out how many importers need to stay in scope to capture at least 99% of emissions. An algorithm counts, for each possible mass threshold, only those emissions from importers that import more than the mass-based threshold.  Example: For a mass-threshold of 40t, all emissions of all importers with annual mass of more than 40t of CBAM goods are counted. The algorithm does the same for every possible number within a credible range and then divides for each possible mass-based threshold the emissions above the threshold by total emissions in scope if no de minimis were to apply. This gives us a number of around 51.3t.

Step 3: For simplicity and clarity in communication, and also to avoid having to update the threshold in the future at the margin, we round the threshold to the nearest ten, i.e. in this case to 50t. The goal is to set an annual based threshold so that at least 99% of all emissions from these imported goods are tracked. This system ensures that the vast majority of emissions are accounted for, without tracking every small importer. If trade patterns or emission intensities change significantly over time, the threshold will be adjusted to maintain the 99% emissions coverage.

Investment Omnibus

16. What specific regulations will be simplified, and how will this reduce administrative burdens for businesses and citizens and improve competitiveness?

The InvestEU and EFSI Regulations will be simplified with a view to reducing the frequency and the content of some reports e.g. exempting small final recipients such as SMEs, as well as the application of certain rules (e.g. the adjusted application of the SME definition for certain financial products), in line with the principle of proportionality. In this way, it aims at reducing the administrative burden for the InvestEU implementing partners and also for financial intermediaries and final recipients, notably the SMEs, which need to provide information for reports to the Commission and also to apply the established rules.

The simplification will also cover non-legislative requirements applying to InvestEU, EFSI and to legacy instruments (like InnovFin,CEF …), in particular regarding the reduction of frequency and content of certain reports.

Such simplifications are expected to save around EUR 350 million for implementing partners, financial intermediaries, final recipients of InvestEu funds.

17. What measures are being proposed to ensure that small and medium-sized enterprises (SMEs) benefit from these simplification efforts?

Many of the proposed measures will benefit SMEs directly and, in some cases, exclusively. This is in particular the case for a simplified application of the SME definition and for the waiver of KPIs for small transactions. Furthermore, the reduction of frequency and content of some reports will also benefit SMEs, to the extent they will not be required to provide inputs for these reports to the implementing partners.

18. How exactly the proposed measures will unlock the investment capacity of around EUR 50 billion?

The proposal to amend the InvestEU Regulation would help mobilise additional EUR 50 billion of investment by:

1) increasing the size of the EU guarantee by EUR 2.5 billion, and

2) facilitating the combined use of the InvestEU guarantee with existing capacity available under three legacy programmes (EFSI, CEF Debt Instrument and InnovFin Debt Facility) to support new InvestEU financing and investment operations.

By streamlining the programs’ operations, the Commission expects to unlock around €50 billion in public and private investment, driving growth and innovation in key sectors such as clean tech, digitalization, and sustainable infrastructure.

Source – EU Commission

Remarks by Commissioners Dombrovskis and Albuquerque on the proposals to simplify rules on sustainability and EU investments

“Check against delivery”

 Commissioner Valdis Dombrovskis

Good afternoon.

Let me begin with the big picture.

The world is changing before our eyes.

We see dramatic shifts in the geopolitical landscape.

This week alone, we saw a long-standing strategic partner vote against a UN resolution condemning Russia’s aggression against Ukraine.

We need to treat these developments as a call to action.

The freedoms that we enjoy and the values that we cherish can no longer be taken for granted in a complex world.

For the EU, they also depend on maintaining and further developing our economic base by adapting, innovating, and competing in the world. In short, we need to build a more competitive Europe.

Earlier today, my colleagues presented the Clean Industrial Deal and an action plan to bring down energy prices as part of that effort.

Cutting red tape is another important element to achieve more competitive Europe.

Put simply, we cannot hope or expect to successfully compete in a perilous world with one hand tied behind our backs.

The past five years have been a period of intense regulatory activity.

While our commitment to securing the green transition has not wavered, we must acknowledge that this has come at a cost, generating a large regulatory burden on people and businesses.

As we take stock, we see that this accumulation of rules, and their increased complexity, are limiting our economic potential and our prosperity.

Today, regulation is seen by more than 60% of EU companies as an obstacle to investment. 55% of SMEs flagging regulatory obstacles and administrative burdens as their greatest challenge. In Europe, small and medium-sized enterprises (SMEs) constitute approximately 99% of all businesses.

They are most at risk of being suffocated by administrative burdens. They are Europe’s economic engine, for whom we are speaking and acting with today’s proposals.

I also want to be very clear that we remain deeply committed to building a greener and fairer society and economy.

Simplification is about making sure that EU rules help deliver – rather than impede – the achievement of our economic, social, environmental and security goals.

It is about achieving those goals in a smarter and less burdensome way.

Less bureaucracy means more innovation and investment [that will secure our long-term prosperity.]

It means creating new and quality jobs for European workers.

It provides citizens with the opportunity to stay, live and work in any region of Europe, from Portugal to Finland.

Today’s simplification proposals also help to ensure that responsible European companies can continue to invest and do business across the world.

The alternative is retreating and ceding the ground to competitors who do not necessarily share our values nor working methods.

Taken all together, that is why we have committed to this ambitious and far-reaching simplification agenda.

Let me now outline today’s proposals.

Companies and stakeholders have repeatedly stressed the need to ensure certainty.

Today, we proposed a “stop-the-clock” to delay the application of the Corporate Sustainability Reporting Directive (CSRD) for companies that have not started reporting yet.

We also proposed to delay the transposition and application of corporate sustainability due diligence (CSDDD).

This seeks to avoid a situation in which companies that are required to report for the 2025 financial year (second wave) or 2026 (third wave) are then subsequently relieved of this requirement, incurring unnecessary and avoidable costs.

We will propose to the co-legislators to subject this proposal to a fast-track adoption.

Moving to sustainability reporting.

Firstly, we are freeing around 80% of companies currently under the scope of the CSRD from very burdensome reporting requirements.

Secondly, we are limiting the information that larger companies under the scope of the CSRD can request from smaller companies not in scope – benefitting especially SMEs.

Thirdly, we will review the European Sustainability Reporting Standards, with a view to streamlining them substantially and making them easier for companies to use.

Finally, we are lifting the mandate to adopt sectoral-specific standards and the possibility of moving from a requirement for limited assurance to a requirement for reasonable assurance.

We are therefore providing clarity that there will be no future increase in auditing costs for companies in scope related to sectoral-specific standards and the possibility of moving from a requirement for limited assurance to a requirement for reasonable.

On due diligence, we are extending the scope of maximum harmonisation, targeting due diligence, as a general rule, to direct business partners.

At the same time, the proposal recognises that there can be situations where companies have to look beyond their direct business partners when, for instance, they become aware of possible harmful activities at the level of an indirect supplier.

We are extending the intervals in which companies need to regularly assess the adequacy and effectiveness of due diligence measures, from one to five years.

This will significantly reduce burdens not just for in-scope companies but also for their business partners, which would receive (detailed) information requests as part of these monitoring exercises.

Regarding penalties, we are moving towards a more proportionate regime, that shall be “effective, proportionate and dissuasive”, and longer linked to a percentage of global net turnover.

Finally, we are moving away from the EU-wide civil liability regime conditions while preserving the right to full compensation for victims under the civil liability regimes of Member States.

Lastly, I turn to Taxonomy. Today the College proposed making Taxonomy reporting more proportionate, proposing that only very large companies (above 1,000 employees, and €450 million turnover) are required to report every year on their Taxonomy alignment.

This amendment will free more than 80% of companies from compulsory Taxonomy reporting.

We are also presenting unprecedented simplification changes to the Carbon Border Adjustment Mechanism (CBAM).

We are doing this on basis of reporting and data gathered during the CBAM transitional phase where we learnt that tens of thousands of small importers were subject to the CBAM, but their imports represented only about 1% of CO2 emissions.

With a new threshold we are eliminating CBAM obligations for approximately 182,000 or 90% of importers, most of which are SMEs.

This is expected to bring about €1.12 billion in savings while still covering over 99% emissions in scope.

The new threshold will also bring cost savings to public authorities in Member States worth approximately €87.5 million, through less processing of importers who are now exempt.

This is a clear example of the win-win scenario that simplification can bring about: achieving our green objectives while strengthening our economy.

We also propose to optimise and simplify the functioning of several investment instruments including InvestEU, the European Fund for Strategic Investments (EFSI) and other legacy financial instruments. This proposal is breaking new ground.

First, it entails a substantial reduction of administrative burden for our implementing partners, financial intermediaries and final recipients, notably the SMEs. These simplification measures are expected to generate a total of around €350 million in cost savings.

Secondly, we also propose measures to increase the real investment capacity under InvestEU to mobilise around €50 billion in additional public and private investments. This will help address existing and emerging new priorities and direct the additional investment capacity in support of priority policies, such as the ones outlined in our Competitiveness Compass and the Clean Industrial Deal.

Today’s first two omnibus packages mark a strong start to delivering our simplification agenda.

A conservative estimate puts the annual savings stemming from these packages at €6.3 billion.

Our next proposals will target small mid-caps, farmers and changing paper reporting into a digital one.

We are determined to deliver.

Our future prosperity and security depend on us taking action now. I will stop here. Thank you.

Commissioner Maria Luís Albuquerque

Good morning,

We started this exercise of simplification with two objectives in mind:

• Alleviate burdens that are unnecessary and that create complexity without much value added
• Keep in line with our Green Deal objectives.

We need to achieve these two goals, as they are essential to regain competitiveness. And they are not incompatible, we can achieve both. And we should be ambitious in the simplification we bring about.

We can only achieve simplification if we also look for simplicity and coherence. A simplification exercise delivering simplicity seems obvius, but in any case, good to keep in mind. Likewise with coherence: coherence between different pieces of legislation and coherence within the text itself.

One further element to keep in mind when trying to deliver simplification is proportionality. We need to keep in mind how requirements can be implemented by different companies.

Urgency another element we need to bear in mind in this exercise. And what and why we do it for – competitiveness that can provide wellbeing for our people.

With this setup in mind, we have looked at how to simplify our sustainable finance rules – namely the Corporate Sustainability Reporting Directive (CSRD) and the Taxonomy –

How do we see this package delivering on all these goals – competitiveness and sustainability which should go hand in hand?

First, the “stop the clock proposal” delivers on simplicity, coherence, proportionality, as it will allow companies that will be descoped from CSRD to have legal certainty that they do not need to prepare for the reporting ahead of a final decision in this regard.

Second, the changes to CSRD are delivering substantial and ambitious simplification, in a proportionate way:

• Around 80% of companies will be descoped from CSRD; some of them will continue reporting voluntarily. Now the CSRD rules will apply to all companies with more than 1000 employees or a turnover above €50 million
• Those reporting voluntarily will have a simplified standard that would ensure consistency and comparability, to be adopted via a delegated act;
• The scope of CSRD will be more aligned with that of the CSDDD;
• Companies that are not reporting and that are included in the value chain of larger companies in scope will be protected from excessive requests to provide information if they have up to 1 thousand employees, thus reinforcing and strengthening the current value chain cap;
• It would apply directly to the reporting company instead of being only a limit on what ESRS can specify. And it would require that assurance providers respect the obligation that undertakings do not seek more information than that covered by the voluntary standard;
• Likewise, by removing the requirement to move from limited assurance to reasonable assurance we also ensure that companies will not have to shoulder future costs;
• Sector-specific standards will no longer be developed;
• We are making taxonomy reporting voluntary for companies which have a turnover below four hundred and fifty million (450) euro.

Third, this package will be complemented by a re-assessment of the European Sustainability Reporting Standards to reduce datapoints and, in sum, make the reporting more meaningful and focused.

Fourth, we are also publishing a four weeks consultation, amendments to the taxonomy Disclosure delegated act and the environment and climate delegated act (level 2). The adjustments we are making to these two delegated acts will allow us a very significant alleviation:

• For companies remaining in scope and those that wish to voluntarily report, the simplification measures will eliminate almost 70% of the data points of the reporting templates.
• We are introducing a materiality threshold of 10% into taxonomy. Companies can then focus their efforts of assessing Taxonomy- compliance (e.g., eligibility and alignment) of the activities that represent a significant share of their revenues, capital or operational expenditures;
• We further reinforce the proportionality of the taxonomy by allowing companies not to report on alignment of operational expenditure (OpEx) if their eligible activities do not exceed 25% of their cumulative turnover;
• Non reporting entities will be excluded from the denominator of the green asset ratios, applicable to banks;
• We postpone until 2027 the application of trading book KPI, and Fees and Commission KPI for banks;
• We simplify and shorten the reporting templates, leading to a reduction of 66% for non-financial undertakings and of 89% for credit institutions;
• We simplify certain provisions under the generic criteria for “Do no significant harm” to pollution prevention and control regarding the use and presence of chemicals. This will facilitate compliance and significantly reduce administrative burdens on reporting companies that operate in all economic sectors under the Taxonomy.

As I mentioned, we are keeping the ambition of our Green Deal. How?

• By ensuring we keep in scope the largest companies which are more likely to have an impact on environment and people;
• By re-assessing the information and datapoints that are really needed (and not nice to have) we make reporting more meaningful and focused – as all those in need of information will more easily find what they are looking for;
• By giving companies a choice to opt out of some of the reporting requirements, we create space for the companies to make their own assessment on the usefulness of such reporting – and therefore, transform the reporting from a mere compliance instrument into a strategic reflection;
• By explaining that reporting on partial alignment is possible under the taxonomy, we also foster gradual environmental transition, in line with the objective of scaling up transition finance;
• And by ensuring that a central element of the Green Deal – the double materiality – is preserved.

Thank you.

 Source – EU Commission

EPP Group: Less bureaucracy makes Europe stronger

The EPP Group views the forthcoming “Omnibus” business simplification initiative as a “crucial step” and will push for its success with full force. Europe urgently needs to foster growth and create more jobs for long-term prosperity for future generations.

“Cutting unnecessary red tape and simplifying rules is essential for growth, jobs, and future prosperity,” said Tomas Tobé MEP, EPP Group Spokesman for the Omnibus simplification package. “Now, we take a crucial step to revive our economy and unleash its potential,” Tobé noted. Small and medium sized enterprises (SMEs), the backbone of Europe’s economy, need more time to innovate and grow, rather than being tied up with bureaucracy.

The EPP Group aims to cut regulatory complexity without compromising on oversight and accountability. Some reporting obligations remain essential for EU goals like environmental safety and climate action, but unnecessary red tape must go.

“We must listen to businesses, which provide vital employment. To build a competitive Europe, we must free companies from unnecessary paperwork so they can focus on innovation and growth,” said Dolors Montserrat MEP, EPP Group Vice-President for Economy and Environment.

“Measuring and recording CO2 emissions per product, for example, under the Carbon Border Adjustment Mechanism (CBAM), is too burdensome for most SMEs. We support CBAM, but want it to be simpler and fairer, with sensible exemptions,” explained Montserrat.

The European Commission will propose its first Omnibus law package tomorrow. It will simplify obligations such as due diligence and sustainability reporting. This will contribute to reducing administrative burdens in Europe by at least 25%, with a 35% reduction target for SMEs.

Source – EPP Group

S&Ds on Omnibus Package: Simplification of EU legislation must not endanger existing achievements for citizens and businesses

The Socialists and Democrats in the European Parliament are disappointed by the proposals put forward by the European Commission on the “Omnibus package”. These proposals fail to take on board our concerns expressed in repeated meetings with Commission representatives before the publication. Simplification cannot mean questioning our key EU values. These proposals are risking regulatory certainty. They have been rushed and lack proper consideration, consultation and impact assessment.

The Socialists and Democrats are ready to work with the pro-European majority in the European Parliament to simplify rules, provided that we do not put people at risk and endanger existing climate goals. The package refers to four key files, namely the Taxonomy regulation; the Carbon Border Adjustment Mechanism (CBAM); the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

Gaby Bischoff, vice-president of the S&D Group for Sustainable Economy, Social Europe and Single Market and S&D co-negotiator on the package, said:

“Our message on the proposed changes in EU law is clear. Simplification cannot mean deregulation. Our Group has always been and remains ready to work to deliver simpler procedures and reporting for businesses and to make life better for citizens. We will not accept backtracking on social and environmental standards and established policy goals, no jeopardising of workers’ rights, no break to reaching climate neutrality and sustainability. The recently agreed rules on due diligence aim to prevent economic activities from exploiting people and harming the environment. We cannot empty them now in the name of simplification and put profit before people and the planet. The Taxonomy regulation for example is essential for mobilising green investments and providing stability to the financial system. It is a good signal that the Commission at least preserves the ‘do no harm’ principle.”

Lara Wolters, S&D MEP and S&D co-negotiator on the package, said:

“The proposed changes to the CSDDD fundamentally undermine its effectiveness, threatening to exclude the vast majority of human rights, labour and environmental harms and stripping away the rights for victims to get justice for corporate wrongdoing. “Likewise, drastic changes to the CSRD will create significant uncertainty for companies, which risks increasing compliance costs, instead of relieving burdens. “This is therefore an ill-conceived and ideologically driven proposal. The Parliament must now succeed where the Commission has failed: to simplify without deregulating.”

Source – S&D Group (by email)