Leaked EU Omnibus Proposal: Is Sustainability at Risk?

The EU’s upcoming simplification omnibus package has had the sustainability rumour mills working hard. 

Parts of the full omnibus proposal draft appear to have leaked, showing cuts to the CSRD and CSDDD. 

The full release is expected on 26 February 2025. 

Changes in the apparent leaked documents include aligning the scopes of CSRD and CSDDD to leave only the largest companies affected and restrictions to information requests along the value chain. 

Andreas Rasche, Professor and Associate Dean at Copenhagen Business School, said on LinkedIn: “This is very disappointing and not at all proportionate. 

“The document gives no evidence-based reasons for the changes, and the process up to this point was neither transparent nor inclusive.”

Andreas said: “Yes, simplifications are needed and there are ways to make such simplifications, but what is suggested in this document does not simplify. It deregulates.”

Why does the EU need a simplification omnibus?

In 2024, the Draghi Report detailed ways for the European Union to become more competitive and issues the Union must resolve.

The report reads: “Innovative companies that want to scale up in Europe are hindered at every stage by inconsistent and restrictive regulations.

“As a result, many European entrepreneurs prefer to seek financing from US venture capitalists and scale up in the US market.”

The EU Competitiveness Compass aims to address the findings of this report through simplifying regulations in the union. 

In December 2024, more than 90 organisations representing civil society, businesses, banks and investors issued a joint statement urging the EU to improve its implementation of CSRD standards whilst maintaining the directive's robustness.

Before the omnibus’ announcement, US politicians had already voiced opposition to the CSDDD and its potential impact on companies outside the EU.

Ursula von der Leyen, President of the European Commission, has said that "the content of the laws is good, we want to maintain it and we will maintain it."

She adds: "But the way we get there, the questions we're asking, the data points we're collecting is too much, often redundant and often overlapping."

What the leak shows

The leaked draft shows changes to the CSRD, CSDDD and the EU Taxonomy, and the final document is expected to show changes to the carbon border tax. 

Changes in the leaked document include asking companies to only look at direct suppliers, where previously they were expected to follow the supply chain further, and getting rid of sector-specific standards. 

Despite reports of “double materiality” assessments being scrapped, this is not mentioned in the leak. 

The CSRD’s implementation would also be delayed by a year and only reach companies with more than 1,000 employees and turnover of €450m (US$471m), aligning its scope with the CSDDD. 

In the CSDDD, the leak shows that the frequency of supply chain monitoring would be reduced from annual to every five years and only apply for companies with more than 500 employees. 

It would also scrap civil liability and remove due diligence requirements for financial institutions. 

María Mendiluce, CEO of the We Mean Business Coalition, said on LinkedIn: “What’s at stake is more than just regulatory fine-tuning - scaling back reporting requirements means losing vital insights into corporate risks and opportunities. 

“Without comprehensive sustainability data, businesses, investors, and governments will struggle to identify and address climate-related vulnerabilities, weakening their ability to drive resilience, innovation, and long-term competitiveness.”

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