European Commission’s Omnibus Proposals: Key Changes to CSRD and CSDDD

The European Commission has disclosed two major legislative packages—Omnibus I and Omnibus II—aimed at reducing regulatory burdens, improving sustainability rules, and unlocking investment.

Objectives

The proposals seek to achieve:

• A 25% reduction in administrative burdens.
• At least a 35% reduction for SMEs.
• Simplified requirements for sustainability reporting, due diligence, EU taxonomy, the Carbon Border Adjustment Mechanism (CBAM), and investment programs.

Key Changes for CSRD

1. Scope Reduction: 80% of companies removed from the Corporate Sustainability Reporting Directive (CSRD) scope.
2. Reporting Deadlines Extended: Two-year delay for companies set to report in 2026.
3. EU Taxonomy Reporting Simplified: Materiality thresholds clarified.
4. Green Asset Ratio (GAR) Adjustments: Companies below the 1,000-employee CSRD threshold excluded, reducing unnecessary reporting obligations for banks.
5. Sector-Specific Standards Removed: Eliminating additional reporting complexity.
6. “Do No Significant Harm” (DNSH) Criteria Simplified: Ensuring more practical application.
7. Assurance Requirements Reduced: Moving from limited to reasonable assurance requirements is no longer mandatory, preventing increased costs. Instead of mandated sustainability assurance standards by 2026, the Commission will issue targeted assurance guidelines.
8. Clarifications & Consistency: Aligning CSRD provisions with other EU regulations and ensuring clearer materiality principle applications.

Key Changes for CSDDD

1. Due Diligence Scope Limited: Now applies only to direct business partners.
2. Reduced Assessment Frequency: ESG impact reviews required every five years instead of annually.
3. Implementation Delayed: New compliance date set for July 2028 (previously July 2027).
4. SMEs Protection: Shielding SMEs from excessive data requests.

Next Steps

The proposals are now under review by the European Parliament and the Council.

ECIIA Perspective

The European Confederation of Institutes of Internal Auditing (ECIIA) welcomes the Commission’s efforts to make sustainability reporting frameworks more practical while maintaining the objectives of the Green Deal. ECIIA supports reducing unnecessary complexity by focusing on strategic and essential reporting information and ensuring regulatory consistency.

However, ECIIA expresses concerns over significant reductions in scope and postponements, warning that delays could undermine the Green Deal’s objectives and create regulatory uncertainty. A stable and clear regulatory framework is crucial for European businesses’ competitiveness.

Internal auditors will play a key role in supporting organisations through these changes, ensuring compliance while optimising governance and risk management frameworks.

For further details on ECIIA’s position and recommendations, refer to the slides below.