NORTHAMPTON, MA / ACCESS Newswire / March 6, 2025 / The European Commission's recent Omnibus proposal has sent ripples across the sustainability landscape, triggering intense discussions on regulatory simplification, corporate accountability, and the long-term implications for business value. While some see the proposal as a necessary move to ease compliance burdens, others fear it could undermine years of progress in corporate sustainability efforts.
In response to the growing uncertainty, denxpert, a leading sustainability management platform, hosted an exclusive webinar in collaboration with EFRAG to break down the key aspects of the proposal and its potential consequences. The session featured Robert Szucs-Winkler, CEO of denxpert, and Anna Csonka, denxpert's senior sustainability reporting expert, who provided expert insights on what the Omnibus could mean for companies navigating CSRD, ESG reporting, and EU Taxonomy compliance.
With sustainability regulations at a crossroads, businesses are left questioning their next steps: Should they continue investing in reporting and transparency or wait for further regulatory clarity? The webinar explored these pressing concerns, offering guidance on how companies can stay resilient and proactive in an evolving regulatory environment.
What Led to the Omnibus Proposal?
The Omnibus proposal did not emerge in isolation; it is rooted in a series of economic and political pressures that have been reshaping the EU's regulatory landscape:
Geopolitical Pressures: The war in Ukraine and global trade tensions raised concerns about the competitiveness of European companies under stringent sustainability regulations. Policymakers feared that extensive reporting requirements could disadvantage EU businesses.
The Draghi Report (September 2024): The report on EU competitiveness and resilience highlighted sustainability regulations-CSRD and CSDDD-as contributors to high compliance costs, which some argue hinder business growth.
The Budapest Declaration (November 2024): European policymakers called for a "simplification revolution", demanding a 25% reduction in reporting requirements, particularly to ease the burden on SMEs.
The EU Competitive Compass Strategy (2025): This broader strategy outlined simplifications across sustainable finance, due diligence, and taxonomy regulations, reinforcing the Commission's shift toward deregulation.
Anna Csonka, Senior sustainability expert at denxpert, highlighted during the webinar:
"It's important to understand why this proposal came forward in the first place. The European Commission is emphasizing competitiveness and reducing administrative burdens, but the big question is: Does scaling back sustainability reporting make European companies more competitive, or does it just delay progress? That's the debate we're in right now."
These factors coalesced into the Omnibus proposal, which now seeks to postpone CSRD reporting for two years, reduce the scope of mandatory reporting by 80%, and shift toward voluntary ESG disclosures.
The Core Debate: Simplification or Deregulation?
While the Omnibus proposal is framed as a way to reduce compliance burdens and enhance corporate competitiveness, critics warn that it risks shifting from simplification to outright deregulation. A key concern has emerged in the debate: Does scaling back sustainability reporting truly support competitiveness, or does it undermine transparency and long-term value creation?
As Gemma Sánchez Danes, a member of EFRAG's leadership team, highlighted:
"This is still a proposal, not a final decision. The European Parliament and the Council of the EU must still approve it, and reaching a consensus will take time. Companies need to stay calm and focus on why they are reporting in the first place. Sustainability reporting is not just a compliance exercise, it's a strategic tool for risk management and value creation."
This uncertainty has put many companies at a crossroads-should they continue preparing for CSRD compliance or hit pause? But is that the real question? Should sustainability reporting be reduced to a mere regulatory exercise, or does it serve a greater purpose-one with tangible business impact?
A critical factor driving this confusion is that, until the Omnibus proposal is formally adopted, national transpositions of the CSRD remain legally binding. Companies choosing to delay their preparations-betting on a scope reduction or a reporting postponement-are taking a considerable risk. If the proposal does not pass or if they ultimately remain in scope, they could find themselves rushing to comply at the last minute, facing unnecessary costs and operational strain. In many cases, the price of waiting may be far greater than the cost of staying the course.
Several major corporations have already taken a firm stance: regardless of regulatory shifts, they will continue their sustainability reporting. For them, ESG data, transparency, and accountability are not just about compliance; they are essential for risk management, resilience, and long-term strategic growth. Businesses that act now won't just stay ahead of regulation-they'll secure a competitive edge in a market increasingly shaped by sustainability expectations.
Breaking Down the Omnibus: Key Changes
1. CSRD Scope & Timeline: "Stop the Clock" Modification
One of the most significant changes proposed in the Omnibus is a two-year postponement of CSRD reporting obligations for companies in the second and third waves. This delay is intended to prevent companies from investing heavily in compliance only to be exempted later due to regulatory revisions. However, because the Omnibus is still just a proposal, many businesses find themselves in a state of so-called limbo. While the EU Parliament and Council review the proposal, the "Stop the Clock" timeline could take up to five or six months to be approved, leaving companies unsure of their next steps.
For corporations set to begin reporting in 2025, the situation is particularly frustrating. Many have already invested substantial resources into compliance, only to now question whether those efforts were wasted. But is that really the case?
If the modification of the scope is accepted, it will be significantly downsized. Companies will need to meet two out of the three key criteria to remain in scope:
1,000+ employees
Annual turnover exceeding EUR 50 million OR a balance sheet total above EUR 25 million
This revision would result in an 80% reduction in the number of companies required to report, effectively removing many previously included businesses from the mandatory reporting framework. For those now outside the scope, the question remains: Should they abandon their sustainability reporting efforts, or will transparency and ESG data continue to play a strategic role in their long-term business success?
Robert Szucs-Winkler, CEO of denxpert, commented on the practical implications:
"Some mid-sized companies told us that the amount of investment they had to put into adapting CSRD and starting the reporting process was overwhelming. They had planned budgets for sustainability initiatives but had to redirect everything toward compliance. Now, with this proposal, they face uncertainty about whether that investment created value at all."
2. Voluntary Reporting: A Real Alternative?
With a substantial number of companies potentially falling out of mandatory reporting, a key question emerges: Will voluntary standards bridge the gap?
The European Commission suggests that companies outside the CSRD scope may voluntarily report under a new standard, possibly based on the VSME framework. However, this remains speculative, as EFRAG has not yet been formally mandated to develop such a standard.
Experts stress a crucial distinction: VSME is not a reporting standard but a checklist. Unlike the ESRS framework, it lacks depth and does not follow a materiality-based approach. The framework includes only 20 disclosures, failing to comprehensively cover critical social and governance aspects. It is not a 'fair view' presentation.
This distinction raises concerns about the comparability and credibility of voluntary reporting, particularly for investors and financial institutions that rely on standardized ESG data. Without a cohesive and regulated framework, will voluntary disclosures provide the level of transparency needed to drive sustainable business practices?
For now, much remains uncertain-until the EU Commission issues a formal mandate, discussions around a new voluntary standard remain purely speculative.
3. EU Taxonomy: From Mandatory to Opt-In
Another key shift in the Omnibus proposal is the transition of the EU Taxonomy into an opt-in regime. Under the new framework:
Large companies (1,000+ employees, EUR 450 million turnover) can voluntarily report if they claim full or partial alignment with the EU Taxonomy.
The requirement to meet all technical screening criteria is relaxed, meaning companies can disclose partial alignment instead of full compliance.
Those who opt in must disclose turnover and CapEx KPIs, with the option to disclose OPEX KPIs.
This change could lead to the fragmentation of sustainability data, making it harder for investors and stakeholders to assess corporate sustainability performance.
Beyond the Omnibus: What This Means for Companies & Investors
The Omnibus proposal is just that-a proposal. It still has to pass through the European Parliament and Council, facing divided opinions. However, the broader conversation it has sparked is critical:
Does sustainability reporting support or hinder competitiveness?
Will companies voluntarily report if no longer required to do so?
How will investors navigate an increasingly fragmented data landscape?
The conversation around CSRD and CSDDD must move beyond compliance costs and toward long-term value creation. Sustainability reporting isn't just about meeting regulations-it's a strategic framework that enables companies to identify risks, enhance operational efficiency, and align with investor expectations.
As the future of the Omnibus proposal unfolds, one thing remains certain: businesses that stay committed to sustainability will be in a stronger position, regardless of regulatory changes. Companies that have already started preparing for CSRD need to ensure their reporting processes remain structured, efficient, and adaptable to potential legislative shifts.
A well-designed reporting system is key to navigating these changes. Tools that centralize data collection, ensure ESRS alignment, and facilitate audit readiness can help companies stay on track-whether the regulatory framework shifts or not.
For a deeper understanding of what these developments mean in practice, denxpert's latest webinar unpacks the Omnibus proposal's potential impact and what companies should focus on next.
Watch the on-demand session to stay informed and prepared.
Find more information on our Global Sustainability Reporting Services and how we can help your company navigate these different reporting frameworks and requirements.
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