EU Sustainability Policy Update: An Overview of the Omnibus Proposal for Companies

Background

In the last few years, the European Union has adopted a series of sustainability reporting rules that together comprise some of the most significant disclosure requirements facing private sector companies. The CSRD, CSDDD, and CBAM, in particular, have already required thousands of companies to disclose a host of sustainability metrics and pass an audit.

Today, the EU Commission has proposed adjustments to these sustainability regulations to simplify reporting and focus them on the largest companies with the biggest impact.

In summary, the Omnibus package would cut the scope of reporting companies to those with more than 1,000 employees, around 7,000 companies, and reporting timelines would be delayed by two years. Additionally, companies further up the supply chain would be less likely to field data requests, and reporting obligations around imported goods will be streamlined (though are still set to expand).

We expect a few broader implications that companies should keep in mind:

This proposal confirms the reality of sustainability disclosure for thousands of companies and their suppliers, while acknowledging that disclosure must go hand-in-hand with economic competitiveness.
Companies have an opportunity to evolve beyond the disclosure paradigm that has become synonymous with corporate sustainability work for the past 18+ months.
Sustainability teams have a renewed mandate to show the business value that has always accompanied their work across energy efficiency, supply chain optimization, and more.

Summary of Proposed Adjustments

This section summarizes the main proposed adjustments in the EU Omnibus package, distilling the major themes for each piece of regulation.

CSRD

Proposed adjustments to the Corporate Sustainability Reporting Directive would reduce the number of companies in scope and streamline some requirements.

The CSRD threshold requirements would change. The regulation would apply to firms with greater than 1,000 employees (previously 250), which will cut the scope from 50,000 to about 7,000 companies.
- For US companies with operations in Europe, the threshold for reporting would be raised to €450M net turnover.
The proposal would also remove sector-specific standards that would add additional, tailored reporting criteria depending on your industry, and entail changes to the ESRS data points companies must report.
Companies required to report in 2025 will still need to do so. For companies required to report as of 2026 or 2027, the submission deadline will be postponed until 2028.
Companies still need to conduct a double materiality assessment.

CBAM

The Carbon Border Adjustment Mechanism is the EU’s rule requiring companies to account for upstream, embedded carbon emissions in the materials they import into the continent. While aspects of this will be streamlined, it is still expected to expand in scope.

The EU proposes a new threshold of 50 metric tons per importer, which will eliminate many small and medium businesses and individuals who were previously in scope but imported minimal quantities.
The calculation methodology and reporting protocol will be streamlined for importers that remain in scope.
Rules to avoid circumvention of CBAM will be strengthened, and the regulation will be extended to other sectors and downstream goods as early as 2026.

CSDDD

The Corporate Sustainability Due Diligence Directive requires large companies to map and take steps to mitigate material risks within their supply chains, including sustainability and human rights considerations.

The EU proposes narrowing the scope of supply chain requirements by focusing on companies’ direct business partners and largest risks up the value chain.
The requirements for reporting for the largest companies will be postponed until 2028, with the guidelines set to be adopted in 2026.
Similarly, they would align the scope of companies falling under the CSDDD with that of the EU Taxonomy, and introduce a financial materiality threshold for the taxonomy.
The proposal also removes civil liability from companies.

What Happens Next?

It’s important to note that these changes have not yet been adopted. The Omnibus proposal must be reviewed and approved by the European Parliament and Council before becoming law. There will be push back by some member countries and industry bodies, and the process will likely take months to be finalized. The standards-setting guidance will also need to be adjusted depending on the final rules.

Initial Perspective: Beyond Disclosure

The Gravity team and advisor network will continue closely following and posting updates on the Omnibus process, as well as the evolving global regulatory landscape. In the meantime, we want to offer a few preliminary takeaways companies should keep in mind.

Economic competitiveness and business value must be center stage

Regulations like those amended today have commanded the lion’s share of attention for 18+ months, sometimes at the expense of implementing sustainability projects that deliver positive ROI.

While understandable, the balance will need to shift, particularly as the US refocuses on energy efficiency and business performance and as global energy prices continue to be volatile. Now more than ever, teams have both the opportunity and mandate to show the business value that has always accompanied their work across energy efficiency, supply chain optimization, and more.

This will entail additional engagement with facility maintenance, operations, and supply chain colleagues. Aligning sustainability and economic competitiveness in this climate can’t be lipservice or handwaving consulting-speak. It has to exist in dollars and cents for the CFO audience. Today, many emissions-reduction technologies are cost-reductive and yet massively under-adopted. There are an estimated $2 trillion in savings that can come from energy efficiency projects alone by 2030.

Putting the disclosure paradigm in context

The extent to which regulatory regimes worldwide – not just the EU, but California, Japan, the UK, Brazil, Australia, and more – have converged around sustainability disclosure is remarkable. Like the advent of many other regulatory schemes, last-minute refinement and delayed starts are not uncommon (e.g., the roll out of General Data Protection Regulation in the EU or the Electronic Logging Device mandate in the US).

It’s important to put the recent trend of disclosure regulations in context as one strand in the economy-wide energy transition. A requirement to disclose emissions was arguably never going to be the most compelling reason for a company to actually reduce them, and a narrow scope of disclosure does not necessarily mean narrowed ambition.

Sustainability teams have an opportunity to evolve beyond the disclosure paradigm that has become synonymous with corporate sustainability work.

Some companies will need to recalibrate disclosure strategies in line with business hygiene

The EU Omnibus proposal both confirms the reality of sustainability disclosure for thousands of companies and their suppliers, and shows how disclosure must go hand-in-hand with economic competitiveness.

Those whose deadlines have been pushed out have gained more time to prepare and build momentum into their disclosure window. This will allow them to put in place solid measurement and disclosure – and the tools to accelerate them – that are also good business hygiene independent of regulatory schemes.

In the meantime, many other drivers of emissions measurement and sustainability disclosure remain, including de facto requirements from investors, large customers, and consumers.

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