The EU Omnibus I package

Answer

In the EU, the rules governing how companies investigate, report and manage their environmental and social impacts are shifting once again.

This article explores the changes brought in by the Omnibus I package – why they’ve been introduced, how they’re being received, and what they mean for law firms and their clients – with a focus on the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD).

What are the CSRD and CSDDD?

The EU has long positioned itself as a global leader in sustainable finance and corporate responsibility, and the CSRD and CSDDD are foundational pillars of its environmental, social and governance (ESG) legislative framework.

The CSRD, which entered into force in January 2023, significantly expanded companies’ sustainability reporting requirements. The first set of companies within its scope (‘wave one’) began reporting for financial years starting on or after 1 January 2024, with reports published in 2025. There are number of key provisions:

• Double materiality assessment (DMA): in-scope companies must assess both how their activities impact the environment and society (inside-out), and how sustainability issues impact their performance (outside-in).
• Annual reports: companies must then report on these material impacts, opportunities and risks according to the European Sustainability Reporting Standards.

The CSDDD entered into force in July 2024 and aims to promote sustainable and responsible behaviour from companies. There are a number of key provisions for in-scope companies:

• Due diligence: companies are required to undertake investigations to identify, assess and mitigate human rights and environmental impacts across their operations and supply chains.
• Annual reports: companies are also required to report annually on their due diligence policies, processes and findings.

What’s the Omnibus I?

The term ‘omnibus’ refers to a series of legislative initiatives that intend to simplify existing EU policies and regulations.

These initiatives have emerged in response to growing criticism of the EU’s ESG framework, which some stakeholders view as overly complex and burdensome. This sentiment was underscored in the September 2024 Draghi report, which observed that “larger regulatory flow” was harming Europe’s competitiveness and recommended “simplifying rules”. The cost to companies of CSRD reporting, for example, was estimated to range from €150,000 to €1 million.

Calls for simplification gained further momentum in November 2024, when EU heads of state and the commission president called for a “simplification revolution” in the Budapest Declaration. This was also positioned as a key pillar of the commission’s ‘competitiveness compass’, which set a target to reduce the reporting burden on all companies by at least 25% by 2030. 

In this context, on 26 February 2025, the European Commission published the Omnibus I package (the omnibus), which is the first set of measures aimed at streamlining the EU’s sustainability regime, including the CSRD and CSDDD. 

The Omnibus changes

1) Stopping the clock

The first stage of the omnibus took the form of a ‘stop-the-clock’ directive. Adopted in April 2025, this extended the deadlines for member states to implement the CSRD and CSDDD, and for in-scope companies to comply with the directives, allowing additional time to address concerns about regulatory complexity and to ensure that the reporting and due diligence requirements are both effective and manageable.

CSRD

Different timelines apply to different kinds of companies under the CSRD, referred to in ‘waves’. ‘Wave one’ companies (broadly, large public interest entities and listed companies on an EU-regulated market with more than 500 employees) were unaffected by the stop-the-clock directive, as many began reporting before it took effect. ‘Wave two’ and ‘wave three’ companies (ie, large companies that hadn’t yet started reporting, and listed small and medium enterprises) were granted a two-year extension before reporting is required.

CSDDD

An extra year was granted for member states to give effect to the directive in national law and for companies to comply.

2) Substantive changes

In its second stage, the omnibus makes substantive changes to the directives. Following intensive negotiations between the EU council, parliament and commission throughout 2025, the agreed package was published in the Official Journal of the EU on 26 February 2026 and entered into force on 18 March 2026. EU member states are required to implement the directive’s provisions with respect to the CSRD into national law by 19 March 2027 and by 26 July 2028 with respect to CSDDD. There are several key changes outlined below.

Narrowed scope

The financial and employee thresholds that companies must meet to be captured by the directives have significantly increased, meaning many entities will fall out of scope.

CSRD

As amended, the CSRD will apply to EU companies employing more than 1,000 employees on average and with a net annual turnover over  €450 million (as well as EU parent undertakings of groups meeting the same threshold on a consolidated basis). Non-EU parent companies with the same turnover in the EU (individually or on a consolidated basis) and with an EU subsidiary or branch generating turnover more than €200 million in the EU (in the preceding financial year) are also caught. These new thresholds are estimated to reduce the number of companies in scope by just over 80% compared to the original CSRD.

CSDDD

The CSDDD is set to apply to large EU companies with more than 5,000 employees and a net annual turnover over €1.5 billion; and to non-EU companies above the same turnover threshold in the EU. EU and non-EU companies that entered (or are the ultimate parent company of a group that entered) franchising or licensing agreements in the EU with resulting royalties of more than €75 million (and have more than €275 million net turnover generated in the EU) will also be covered.

Simplified requirements

CSRD

Reporting standards will be simplified and reduced, with a greater focus on material, higher-level information. The commission will prepare a delegated act to amend the reporting framework based on drafts issued by the European Financial Reporting Advisory Group. These drafts aim to reduce the data points that companies must report on by around 60% and are anticipated to be adopted for use in the financial year 2027.

CSDDD

Due diligence will also be simplified. For example, companies may undertake a more limited ‘scoping exercise’, using reasonably available information to identify areas across their chain of activities where negative impacts are most likely to occur and be most severe (with an in-depth assessment only required in these areas). The requirement to adopt and put into effect a transition plan (which sets out how a company will adapt to meet the goals of the Paris Agreement) has also been removed.

Information requests

The information that in-scope companies can request from their value chains has been ‘capped’ under both directives, to prevent compliance burdens “cascading” down to smaller companies. For example, business partners with 1,000 or fewer employees may refuse requests for data that go beyond voluntary reporting standards under the CSRD.

Deadline extension

CSDDD deadlines have been extended by an additional year beyond the stop-the-clock delay, with the first in-scope companies now expected to comply from July 2029.

Views on the omnibus

The omnibus has triggered strong reactions across the political and business spectrum. While proponents argue that the reforms will cut red tape and costs, encourage compliance and boost European competitiveness, opponents warn that the omnibus could undermine the EU’s leadership in sustainable business. There’s a range of key stakeholder concerns:  

• Material ESG risks could go unnoticed: many smaller companies in high-impact industries (eg, energy, agriculture, textiles and manufacturing) will be excluded due to the narrowed scopes, leaving ESG risks potentially unmonitored.
• Changes may harm EU competitiveness: the omnibus may reduce the availability of detailed and standardised ESG data. This data is crucial for investors, as highlighted by the European Central Bank and a group of more than 190 organisations, which in July 2025 urged the EU to preserve the core of its sustainability framework, arguing that the CSRD and CSDDD are “conducive to competitiveness and growth”.

• Changes might lead to fragmented regulation: large companies will still need supply-chain data from smaller firms to comply with the directives. This demand, in combination with the information request caps, may result in inconsistent voluntary or estimated disclosures.
• Knock-on effects: changes to the CSRD and CSDDD will impact other sustainability regulations – for example, the EU Green Bond Standard and Sustainable Finance Disclosure Regulation, which rely on CSRD data to function effectively.

Implications for law firms and clients 

The omnibus will impact a range of both EU and non-EU companies and is particularly relevant for those operating in industries with significant ESG risks – such as energy, consumer and retail, and manufacturing and electronics.

For law firms, the conclusion of the omnibus negotiations presents real opportunities. With the directive in force, advice regarding how changes should be navigated, and what they mean for broader ESG planning, will be in high demand. Areas in which firms can provide value include:

• Scoping and strategy: firms can help clients to confirm whether they’re within scope of the revised thresholds. Additionally, companies now out of scope may still face stakeholder or contractual ESG obligations, as well as information requests from business partners, investors and lenders – this requires strategic decisions about whether to maintain voluntary alignment with EU standards, particularly where this affects companies’ ability to access capital reserved for green investments.

• Timeline, transition and cross-border coordination: clients will need advice on adjusting strategies to meet the confirmed deadlines, particularly as member states transpose the omnibus over the coming years. Mapping EU and non-EU ESG obligations will also be a critical advisory area for international clients that may face obligations under overlapping regimes in different jurisdictions.  
• Compliance and reporting: the requirements of the CSRD and CSDDD can be technical and complex. Law firms can support a range of areas, from providing tailored risk assessments, gap analyses and compliance roadmaps, to assisting with DMAs and drafting disclosures.
• Litigation and risk management: there are concerns that the omnibus may enhance risks of ESG-related litigation. With less structured reporting, companies may make inconsistent or overly positive claims, inviting greenwashing challenges. Recent cases against Deutsche Bank, Coca-Cola and Boohoo illustrate how ESG misstatements can escalate into significant financial and reputational risks. Law firms are well-placed to help clients manage these risks and navigate any claims that arise.
• Broader ESG strategy and interacting obligations: the extended negotiations behind the Omnibus Directive are a reminder that the global ESG landscape remains far from settled. While the EU is seeking to streamline its framework, it continues to take a more interventionist approach to sustainability regulation than North America, for example, where recent policy shifts have moved decisively in a market-driven direction. The CSRD and CSDDD also sit within a wider web of interlocking supply chain obligations (including, for example, the EU Forced Labour Regulation, EU Batteries Regulation and developments in carbon pricing and product regulation) meaning that the overall compliance picture hasn’t simplified in any absolute sense. A key opportunity for law firms will therefore be to help clients map how their obligations interact across this landscape and to develop strategies that are commercially sound and compliant across jurisdictions.

Conclusion

The omnibus marks a pivotal moment in the evolution of EU sustainability law. Not because it dismantles the EU’s ESG framework, but because it reveals the pressures it’s under and the direction in which it’s being reshaped. It reflects an underlying tension: how to maintain robust regulation while reducing the regulatory burden on business.

For companies, the changes offer some relief – streamlined requirements, longer deadlines and narrower scope. But it also raises bigger questions about accountability, transparency and how best to invest in a regulatory framework that remains unsettled.

For law firms, the directive creates fresh opportunities. Firms are well-placed to interpret how the changes will impact clients’ obligations, risk exposure and corporate governance structures and – with the extra time and flexibility the omnibus provides – to guide clients to strengthen their ESG strategies and turn sustainability compliance into a genuine competitive advantage.

Whether the streamlined CSRD and CSDDD ultimately deliver meaningful improvements in sustainability performance remains to be seen. What’s clear is that ESG regulation isn’t retreating – it’s evolving, shaped by the dual demands of sustainable practice and commercial competitiveness, and continuing to move forwards even as it’s recalibrated. Those law firms that can leverage technical expertise, and a strategic perspective, will be best positioned to serve clients navigating this evolving landscape, making this a regulatory space that’ll be particularly interesting to watch in the years ahead.  

Abigail Teasdale is a trainee solicitor at White & Case LLP.