NEWS     26.08.2025

EU corporate sustainability rules are changing – Omnibus I

In recent years, two European Union legislative acts – the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) – have become a key element of the European strategy for sustainable business development.

The CSRD aims to increase corporate transparency regarding environmental, social, and governance (ESG) impacts. Companies are required to report regularly on matters such as CO₂ emissions, labour conditions in supply chains, and anti-corruption policies.

The CSDDD goes a step further by requiring companies to implement due diligence processes to prevent human rights violations and environmental damage throughout their supply chains. Both directives share a common objective: to promote responsible practices and make the European market more sustainable.

However, in practice, implementing both the CSRD and CSDDD turned out to be challenging. Companies raised concerns about increasing administrative burdens, complex reporting procedures, and interpretative uncertainties. Medium-sized and internationally operating companies particularly had difficulties with integrating the new requirements into their existing ESG reporting systems, resulting in delays and additional costs.

As a result, many companies and industry groups called for changes, such as longer deadlines, simpler requirements, and rules that better reflect the realities of global supply chains.

In response, the European Commission introduced a proposal for the Omnibus I package, designed to simplify both CSRD and CSDDD while keeping their original objectives in place. The proposal doesn’t create new obligations – it is a tool to simplify and clarify existing rules.

One of the most immediate effects of the Omnibus I proposal is the adjustment of timelines for both reporting and due diligence obligations. It proposes to postpone the start of mandatory reporting under CSRD to fiscal years beginning on or after 1 January 2027 for large companies, giving them more time to set up internal systems, train staff, and coordinate with their suppliers. The CSDDD will also be delayed. EU countries must implement it into national law by July 2027, with large companies facing real obligations starting in 2028.

The scope of obligations is also set to be redefined. Under the CSRD, smaller companies will have reduced reporting obligations. Instead of requiring every medium-sized company to follow the same comprehensive reporting framework as large multinational corporations, Omnibus I focuses CSRD obligations on companies with the most significant environmental and social impact. At the same time, the proposal suggests limiting the due diligence in the CSDDD to direct suppliers rather than the entire global supply chain.

Another key aspect of the proposal is the move towards digital harmonization. Omnibus I encourages the use of standardised digital reporting, making it easier for companies to collect, process, and share sustainability data. Instead of having to deal with different reporting formats or manually collect data from suppliers, companies would be able to use integrated digital systems to make the process easier.

In addition to adjustments to timelines, scope, and digital reporting, the Omnibus I proposal includes several other measures aimed at making compliance more manageable. Auditing requirements are expected to become simpler, allowing companies to start with less extensive checks rather than immediately undergoing detailed and costly full audits.

At the same time, obligations around suspending contracts with suppliers are likely to be more flexible, helping businesses address issues without disrupting business operations. The proposal also aims to reduce the number of data points companies must report, clarify unclear reporting rules, and focus due diligence on the areas with the highest risks.

Overall, the Omnibus I proposal is designed to make CSRD and CSDDD easier for practical application. While these changes are intended to reduce administrative burdens, they also raise concerns about potentially weakening the directives’ impact on corporate sustainability and accountability. As the proposal moves through the legislative process, a careful balance between simplification and maintaining strong sustainability standards will be essential. Since it remains a proposal, it is not yet binding, and the final rules will depend on the adoption and implementation by EU Member States.

Grzegorz Kłodkowski