On 26 February, the European Commission presented an Omnibus package proposing to scale back the scope of the ambitious sustainability regulations to enhance the competitiveness of businesses within the EU.
The package includes, among other things, changes to the EU’s sustainability reporting requirements, the EU Taxonomy, and due diligence obligations within the value chain.
You can view the key proposals of the package here.
Sustainability reporting requirements may be reduced
The Omnibus package proposes changes to the infamous Corporate Sustainability Reporting Directive (CSRD), which requires large and publicly listed companies to report on sustainability, as well as to the EU Taxonomy.
CSRD currently requires large undertakings and listed companies (excluding micro-undertakings to report on sustainability matters.
With the Omnibus package, the European Commission commits to reducing the volume and complexity of reporting requirements for all affected companies. Additionally, the package includes significant proposed amendments to the scope of the CSRD and the dates from when companies will be subject to its requirements.
The proposed changes to the scope would mean that only companies with more than 1,000 employees and exceed one of the following thresholds for two consecutive years would be covered:
- Net revenue of €50 million (approximately DKK 391 million); or
- Balance sheet total of €25 million (approximately DKK 195 million).
The timeline is proposed to be postponed by two years for companies that were not already subject to the requirements starting from financial years beginning on or after January 1, 2024.
Companies that fall outside the scope of the CSRD are instead encouraged to report in accordance with the voluntary SME standards issued by the EU Commission. These standards will also set a limit on the amount of information that CSRD-covered companies can require from companies that are not in scope.
The transition from limited assurance to reasonable assurance, as well as the issuance of planned sector standards—such as those for financial institutions—is also proposed to be removed.
Impact on the EU Taxonomy
The requirement to report under the EU Taxonomy, which is currently aligned with the scope of the CSRD, is also proposed to change. Under the new proposal, this reporting would only be mandatory for companies with more than 1,000 employees and a net revenue exceeding €450 million (approximately DKK 3,375 million).
Possible impact on the Due Diligence Directive
The Omnibus package also affects the so-called Corporate Sustainability Due Diligence Directive (CSDDD), which sets due diligence requirements for companies within their value chain.
New deadlines
As of now, companies with a net revenue exceeding €1.5 billion (approximately DKK 11.25 billion) and more than 5,000 employees will be subject to the CSDDD in 2027.
The Omnibus proposal postpones the enforcement of obligations for these companies by one year, meaning they would instead be covered from 2028. Additionally, the EU Commission’s deadline for issuing guidelines is moved forward by six months to July 2026, giving companies more time to adapt to the new regulations.
Limiting due diligence to the first tier of the value chain
Under the current version of the CSDDD, covered companies are required to conduct risk-based due diligence on human rights and environmental issues without clearly defined limits on how deep the due diligence should be extended in their value chains.
The Omnibus proposal limits this obligation to the first tier of a company’s value chain, meaning direct business partners and suppliers, unless a company has plausible information suggesting that adverse impacts have arisen or may arise beyond the first tier, e.g. child labor.
Removal of corporate civil liability
Under the current version of the CSDDD, companies are held civilly liable for damages related to human rights and environmental violations if they intentionally or negligently fail to comply with the directive’s obligations. This provision is completely removed in the proposal.
Legislative process and immediate implications
The EU Commission’s Omnibus package has only been proposed and has not yet been adopted.
The comprehensive Omnibus package is subject to EU’s ordinary legislative, which means that both the European Parliament and the Council of the EU must be involved and vote for its adoption before it can enter into effect. Hereafter, it must then be implemented into national law.
The specific timeline for the proposed changes, as well as the immediate postponement proposal, cannot yet be predicted. Furthermore, the timeline depends on how quickly the changes are implemented in national legislation.
What should you do?
We recommend that companies that have not yet started preparations for the CSRD, EU Taxonomy, and CSDDD wait before initiating major measures until there is greater clarity on how the package will be adopted and implemented in Danish law.
KPMG is also hosting a webinar on 12 March regarding the Omnibus package. You can sign up for the webinar below.
