CSRD DIRECTIVE, WHAT CHANGES AFTER THE EU’S OMNIBUS PACKAGE REVISIONS: WHAT’S NEW
To support the competitiveness of European businesses, the European Commission has reduced sustainability reporting requirements, proposing significant changes to the CSRD, CSDDD and EU Taxonomy regulations. A decision that has sparked mixed reactions.
In Europe, discussions are under way regarding the changes to the CSRD, CSDDD and EU Taxonomy put forward by the European Commission on the 26th of February 2025, during the presentation of the first two Omnibus packages, which also concerned the Carbon Border Adjustment Mechanism (CBAM). Once definitively approved by both the Parliament and the Council, the new measures will come into force following their publication in the Official Journal of the European Union.
While Brussels is aiming to reduce sustainability reporting requirements in order to boost business competitiveness and free up additional investment capacity, the proposal has been met with mixed reactions from both the political and economic spheres.
WHAT ARE THE CSRD, CSDDD AND EU TAXONOMY?
Introduced in December 2022 as part of the Green Deal, the CSRD (Corporate Sustainability Reporting Directive) requires a broad range of companies to produce an annual sustainability report, using the European Sustainability Reporting Standards (ESRS) as a benchmark for performance measurement. The policy, that in Italy was transposed into national law on the 30th of August 2024 (Directive 2022/2464/UE), extends non-financial reporting obligations to a number of small and medium-sized European enterprises (different from micro-enterprises) listed on the stock exchange.
The CSDDD (Corporate Sustainability Due Diligence Directive), also referred to as the Supply Chain Act, requests companies to implement measures to prevent and mitigate environmental and social impacts throughout their entire value chain, from design to distribution and storage.
Finally, the EU Taxonomy is a set of criteria for classifying economic activities in relation to environmental objectives, such as the sustainable use of water and marine resources, the transition to a circular economy, the prevention and reduction of pollution, and the protection and restoration of biodiversity and ecosystems.
WHAT CHANGES WITH THE OMNIBUS PACKAGE REVISIONS
The changes to the CSRD will exempt around 80% of businesses, postponing by two years (until 2028) reporting obligations for those currently required to comply by 2026 or 2027.
Additionally, the reporting requirements related to the EU Taxonomy will be reduced and limited to larger companies (those covered by the CSDDD), with other businesses still able to opt in voluntarily.
To further reduce costs and complexity for businesses, due diligence will be limited to direct suppliers (Tier 1), the evaluation periods will be extended from one to five years, a more proportionate sanctions regime will be introduced, and the implementation will be postponed to the 26th of July 2028.
According to a conservative estimate by the European Commission, by reducing administrative burdens by at least 25% — and by 35% for SMEs — by the end of the current mandate, businesses will save approximately 6.3 billion euros annually in administrative costs and will unlock additional public and private investment capacity of 50 billion euros to support political priorities.
CSRD: SIMPLIFICATION OR DEREGULATION? THE DEBATE
According to the European Commission, the changes represent "a major step forward in creating a more favorable business environment to help EU companies grow, innovate, and create quality jobs." However, there has been no shortage of criticism from political representatives, businesses, and associations.
The EU executive is accused of penalising companies that had already aligned with the regulations, adhering to the original timelines, and of limiting investors' access to comparable and reliable sustainability data, undermining the ability to boost investments in decarbonisation. There is a good chance that many companies will in any case publish sustainability reports voluntarily, which will not be consistent with each other and will lack clear regulatory references. This scenario will increase confusion among stakeholders, undermining the comparability of data and diminishing the overall relevance of sustainability reporting.
This chaos could lead to dangerous deregulation. Calls are growing for a halt, at least until 2040, as proposed by the far-right European Conservatives and Reformist Group.
They are capitalising on fears of American tariffs, arguing that the Green Deal regulations will weaken the economic fabric. However, the opposite could likely be true: the green regulations will create a barrier to the trade of technologies and companies in Europe that do not comply with the rules, creating a complex but crucial playing field, provided the 27 remain united on the global stage.
Article by Emanuele Bompan
This blog is an editorial project developed by Ecomondo in collaboration with Renewable Matter.