Omnibus I – What Do the Latest Decisions Mean for Your Sustainability Reporting and Business Strategy?

In recent years, the EU’s sustainability agenda has set the direction for corporate sustainability work by regulating the market and driving sustainable development forward within the Union. However, in 2025, the EU’s focus has shifted towards competitiveness and geopolitical issues, a shift that has led to delays and simplifications of several sustainability directives and regulations. Unfortunately, the political debate has not centered on how sustainability efforts can also strengthen competitiveness and reduce geopolitical risk.

Legislation that has been particularly contentious this year includes CSRD, CSDDD, and the taxonomy. Now, we finally have clarity on what applies going forward. The 16th of December, the agreement on revised thresholds and simplifications regarding CSRD, CSDDD, and the taxonomy was approved in the final EU instance (the trilogue). What remains before Omnibus I enters into force is a formal approval by the Council, publication in the EU’s Official Journal and implementation into national legislation.

What are the key changes introduced by Omnibus I?

• Raised thresholds: CSRD and the taxonomy will apply to companies with more than 1,000 employees and a turnover of at least €450 million. Financial holding companies are exempt from CSRD.
• Transitional exemptions: Companies that began reporting for the 2024 financial year (“wave one”) may be exempt during the transition if they no longer fall under the scope in 2025–2026. This is, however, up to each Member State to decide and implement.
• Limitation of value chain information: From a reporting perspective, smaller companies can refuse to provide larger actors with information beyond the VSME standard.
• CSDDD eased: Applies to companies with at least 5,000 employees and net turnover above €1.5 billion.
• Due diligence process revised: Instead of a strict limitation to own operations, subsidiaries, and direct business partners, companies can focus on parts of the chain where risks are most likely.
• Climate transition plan requirement removed from CSDDD.
• CSDDD postponed by another year: Companies must now comply by July 2029.
• Review clause: Opens the possibility to later review and potentially expand the scope (applies to both CSRD and CSDDD).

Want to read more? See Council and Parliament strike a deal to simplify sustainability reporting and due diligence requirements and boost EU competitiveness – Consilium or contact one of our experts.

What does this mean for companies?
The simplification of reporting requirements means that around 90% of companies previously covered by CSRD and 70% of those under CSDDD will fall outside the scope. It also increases risks for people and the environment when the legal framework does not drive progress as strongly as previously planned.

In our latest report, Does the EU’s sustainability agenda contribute to business competitiveness?, based on interviews with 17 CEOs and sustainability managers, it is clear that sustainability is seen as strategic for business, but reporting requirements have been perceived as overly detailed and resource-intensive. This view was confirmed during the seminar we held with the West Sweden Chamber of Commerce, where several companies emphasised the need for simplifications.

In summary, companies view reporting requirements from two perspectives:

• Advantages: CSRD has elevated sustainability issues to a strategic level, created common processes, and provided insights that strengthen competitiveness.
• Challenges: The level of detail and number of data points have been too high, diverting focus from actual improvement work.

At the same time, the risk picture is clear. Without structured processes, companies risk overlooking climate-related risks, political changes, and market trends. CSRD’s double materiality requirement has helped companies identify these risks and opportunities, a process that risks being lost with the reporting reductions in Omnibus.

Despite the administrative burden, a clear framework for sustainability reporting has created business value, improved risk management, and strengthened market position. The discussion should therefore focus less on which companies are covered and more on how CSRD can be simplified to enable value-creating reporting without unnecessary administrative burden. Investor and customer expectations remain, where sustainability is a hygiene factor and an integral part of business strategy for long-term competitiveness.

What does this mean for the transition?
Overall, the simplifications introduced by Omnibus I represent a lowering of ambition, as significantly fewer companies are affected compared to previous legal requirements. This reduction in ambition, both in terms of the number of companies and the scope of data points, also means that companies at the forefront will not gain the same business benefits from their sustainability efforts, and the pace of transition may slow. There is also concern among companies about competitive distortion if sustainability requirements are not harmonised within the EU.

We see Omnibus as a reminder that sustainability work cannot be reduced to mere compliance. The significant lowering of ambition risks undermining the purpose of sustainability reporting, and the simplifications of the EU’s sustainability framework risk slowing down the transition to a climate-neutral EU by 2050, while reducing transparency and pressure for change within the Union. Companies that use sustainability as a strategic tool for innovation and business development will, however, remain strong as requirements and markets evolve.

Reporting should not just be about numbers—it should identify the most material issues and translate them into action. This way, sustainability work becomes a driver for long-term value creation, competitiveness, and good business on a balanced planet. Companies that wait risk losing both credibility and profitability.

Want to know more?
Together with the West Sweden Chamber of Commerce, we at 2050 held a seminar to discuss how sustainability reporting can strengthen both business and competitiveness. Business leaders, sustainability managers, and decision-makers attended, and we heard from Jörgen Warborn, the EU’s chief negotiator on the Omnibus regulation, about how they are trying to balance clear rules with maintained competitiveness. The seminar was recorded and is available via the link here.

The seminar was based on our recently published report Does the EU’s sustainability agenda contribute to business competitiveness?, which you can read here: Does the EU’s sustainability agenda contribute to business competitiveness? – 2050

Feel free to contact us for more information!

Markus Ekelund, CEO at 2050
Lova Rosenqvist, Senior Consultant at 2050