European Commission unveils the “Omnibus package”

Significant developments in EU Sustainability Reporting, Due Diligence Directive, Carbon Border Adjustment Mechanism and EU Taxonomy Regulation.

On 26 February 2025, the European Commission has proposed amendments aiming to simplify reporting requirements, reduce administrative burdens and enhance competitiveness and sustainability across the EU. In order to achieve those significant developments, reforms were proposed regarding the European Union's Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the Carbon Border Adjustment Mechanism (CBAM) and Taxonomy Regulations. Greek companies operating within the EU framework will be affected by these developments.

Key Proposed Amendments

1. Corporate Sustainability Reporting Directive (CSRD)

Α. Increased Employee Threshold for mandatory sustainability reporting.
Only large undertakings with more than 1,000 employees which meet one of the following two criteria (or parent companies of such a corporate group):

• a turnover of above €50 million; or

• a balance sheet total of over €25 million.

  will now be required to prepare and publish sustainability statements. This change aims to relieve smaller companies from the complexities of extensive reporting obligations.

Β. Voluntary Reporting for SMEs
Small and medium-sized enterprises (SMEs) are encouraged, but not mandated, to adopt these standards to promote transparency and sustainability voluntarily. Listed SMEs will no longer be required to report under the CSRD.

C. Postponement of reporting requirements
Second Wave Companies: The proposal postpones the entry into application of the reporting requirements for large undertakings that are not public-interest entities and that have more than 500 employees. These companies are now required to report for financial years starting on or after 1 January 2027, instead of 1 January 2025.
Third Wave Companies: Small and medium-sized enterprises (SMEs) with securities admitted to trading on an EU regulated market are now required to report for financial years starting on or after 1 January 2028, instead of 1 January 2026.

D. Simplification of European Sustainability Reporting Standards (ESRS)
ESRS will be simplified, reducing the burden of reporting (data points) and clarifying outstanding issues.

E. Simplification of reporting regarding the Taxonomy
Companies with “environmentally sustainable” activities having more than 1,000 employees and which do not exceed a net turnover of EUR 450 million have the option to engage in taxonomy reporting.

2. Corporate Sustainability Due Diligence Directive (CSDDD)

A. Delayed Transposition Deadline and Application
The proposal postpones the transposition deadline for Member States by one year, meaning that Member States should transpose the CSDDD by 26 July 2027. The application of the directive is also postponed by one year for the first group of companies, providing additional time for companies to prepare for their obligations.

B. Simplification and Reduction of Administrative Burdens
Simplifications include:

• Reducing the number of mandatory datapoints in reporting standards.

• Clarifying provisions deemed unclear and improving consistency with other EU legislation.

• Providing clearer instructions on applying the materiality principle, ensuring companies report only material information to reduce unnecessary efforts.

• The value-chain cap is extended and strengthened to limit trickle-down effects on smaller companies, protecting undertakings with up to 1,000 employees from excessive reporting demands.

C. Focus on Direct Business Partners
Due diligence obligations are proposed to be limited to direct (Tier 1) business partners, with exceptions in specific circumstances (i.e. unless there is plausible information about adverse impacts in indirect value chains), significantly reducing compliance costs for companies.

D. Reduced Frequency of Assessments
The frequency of periodic assessments is reduced from annually to every five years, easing the administrative load.

E. Civil liability
The EU Commission proposes to substitute the EU-wide civil liability regime and standing requirements provided in the CSDDD, “authorising” the Member States to define the applicable regimes under domestic laws.

F. Fines
The EU Commission will issue guidelines on penalty frameworks, as the Omnibus package proposes eliminating the provision that sets a minimum fine cap of 5% of a company’s global turnover and removing the requirement for Member States to base pecuniary penalties on a company's net worldwide turnover.

3. EU Taxonomy Regulation

Key Proposed Simplifications:

• Flexibility in Reporting: Companies may focus on financially material activities, reducing the scope of reporting and associated burdens.

• Simplified Reporting Templates: Amendments propose the simplification of reporting templates to provide more flexibility and clarity.

• Cost Savings: The simplifications are expected to result in substantial cost savings, with estimates suggesting a 25% reduction in reporting costs for companies still required to report.

• Partial Taxonomy-Alignment Reporting: Introduction of options for partial Taxonomy-alignment reporting supports companies in gradually transitioning towards full environmental compliance.

Implications for Greek Companies

Greek companies falling within the scope of the CSRD, CSDDD and Taxonomy Regulation will be affected by these proposed changes:

• Extended Preparation Time: Companies have additional time to adjust their reporting systems and processes, ensuring compliance with the new requirements when they come into effect.
• Reduced Administrative Burden: The simplifications aim to alleviate the reporting burden, particularly for SMEs and large companies with up to 1,000 employees. Also, Greek enterprises, especially large companies with extensive supply chains, will benefit from simplified due diligence obligations and extended timelines, facilitating better compliance management.
• Focus on Material Information: Clearer guidance on the materiality principle will help companies focus on reporting information that is truly significant, streamlining the reporting process.
• Reduced complexity: Greek companies involved in environmentally sensitive sectors or those embarking on green initiatives may find these amendments beneficial. The reduced complexity and potential cost savings can ease the compliance process, encouraging more sustainable business practices.

Next Steps

The Omnibus proposals will now need to pass through the EU’s legislative procedure, which includes adoption by the European Parliament and the Council.