Listen to this story:

• €6.3 billion in administrative cost savings – EU simplifies reporting, due diligence, and trade compliance to boost business competitiveness.
• CSRD scope reduced by 80% – Small and mid-sized companies relieved from mandatory sustainability reporting; compliance deadlines extended to 2028.
• €50 billion in new investment unlocked – InvestEU expansion will mobilize public-private funding for clean tech, digitalization, and infrastructure.

EU Simplifies Sustainability and Investment Rules

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

The goal: Achieve a 25% reduction in administrative burdens and at least 35% for SMEs by simplifying sustainability reporting, due diligence, EU taxonomy, the Carbon Border Adjustment Mechanism (CBAM), and investment programs.

Ursula von der Leyen, President of the European Commission Said:

“Simplification promised, simplification delivered! We are presenting our first proposal for far-reaching simplification. EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy. This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way. ”

Stéphane Séjourné, Executive Vice-President for Prosperity and Industrial Strategy said:

“We are taking concrete steps to cut red tape and make EU rules more accessible and effective for citizens and businesses. Today’s package is the first step of our far-reaching simplification efforts across all sectors of legislation. We can show that Europe is not only an incredible market to invest, produce, sell and consume but also a simple market. This proposal delivers real simplifications—less administrative burden, easier access to funding, and clearer, more predictable rules. We keep our objectives but change the way to better achieve them.”

Corporate Sustainability Reporting Directive (CSRD): What’s Changing?

The CSRD—Europe’s key framework for corporate sustainability disclosures—is being significantly streamlined to ease compliance for businesses.

Key Changes

1. 80% of companies removed from CSRD scope

• Now applies only to large corporations (1,000+ employees, €50 million turnover).
• Mid-sized companies will no longer be required to report but can voluntarily disclose sustainability metrics.

2. Two-year delay for reporting deadlines

• Companies that were set to report in 2026 or 2027 now have until 2028 to comply.

3. Simplification of EU Taxonomy reporting

• Reporting is now voluntary for companies with fewer than 1,000 employees.
• 70% reduction in reporting templates and introduction of a financial materiality threshold to focus reporting on significant business areas.

4. Green Asset Ratio (GAR) changes for banks

• Banks can exclude exposures related to companies below the 1,000-employee CSRD threshold, preventing unnecessary reporting obligations.

5. Sector-specific standards removed

• No mandatory sector-based sustainability standards.

6. “Do No Significant Harm” (DNSH) criteria simplified

• Pollution prevention reporting streamlined across all industries.

Corporate Sustainability Due Diligence Directive (CSDDD): Eased Requirements

The CSDDD, which mandates businesses to monitor their supply chains for ESG risks, is being revised to reduce complexity while maintaining accountability.

Michael McGrath, Commissioner for Democracy, Justice, the Rule of Law and Consumer Protection Said:

“We are significantly simplifying compliance for large companies, while upholding the core objective of the CSDDD to prevent companies from indirectly contributing to exploitative business practices, harming human rights, the climate, or the environment through their value chains. We also ensure smaller business partners are not burdened by excessive information requests. By striking this balance, we hold companies accountable for their actions and at the same time we promote more transparent and responsible business operations globally.”

Key Changes

1. Due diligence requirements now apply only to direct business partners

• Companies are no longer required to conduct in-depth assessments of indirect suppliers unless they have evidence of ESG risks.

2. Assessment frequency reduced

• ESG impact reviews now required every five years instead of annually.
• Companies can still conduct ad-hoc assessments when necessary.

3. Legal liability reforms

• EU-wide civil liability provisions removed—cases will now be handled under national laws.
• Victims retain the right to compensation, but companies will not be over-penalized.

4. One-year delay in implementation

• New compliance date: July 2028 (previously July 2027).
• The guidelines for businesses will be published earlier (July 2026) to give companies more time to prepare.

5. SMEs protected from excessive data requests

• Larger corporations cannot demand unlimited ESG data from small suppliers—reporting obligations for SMEs are now capped.

Carbon Border Adjustment Mechanism (CBAM): Key Adjustments

The CBAM, designed to prevent carbon leakage and protect EU industries from high-emission imports, is being simplified.

Wopke Hoekstra, Commissioner for Climate, Net Zero and Clean Growth

“Today, we’re making it simpler to do business in Europe. By simplifying the Carbon Border Adjustment Mechanism (CBAM), we’re empowering companies to reduce their carbon footprint without compromising their competitive edge. While exempting around 90% of companies from CBAM reporting, we still ensure the capture of over 99% of emissions. This marks the first step in a broader CBAM review.”

Key Changes

1. 90% of importers exempt from CBAM compliance

• New 50-tonne threshold exempts small importers, benefiting 182,000 businesses while still covering 99% of total emissions.

2. Streamlined compliance for companies still in scope

• Easier emissions calculations.
• Simplified reporting requirements.
• Faster authorization for CBAM declarants.

3. Tighter fraud prevention rules

• New anti-circumvention measures prevent companies from bypassing CBAM obligations.

4. CBAM expansion plans confirmed

• The EU will propose adding new industries in 2026, covering more ETS sectors and downstream goods.

InvestEU Expansion: Unlocking €50 Billion in Funding

The InvestEU program, which funds strategic projects across Europe, is being expanded to mobilize additional investment.

Key Changes

1. €50 billion in new public-private investment

• The EU will reinvest returns from past projects and reallocate funds from older investment programs.

2. Easier access to funding for businesses

• SME application processes simplified.
• Red tape reduced for financial intermediaries.

3. €350 million in cost savings

• Simplification measures will reduce compliance costs for businesses applying for funding.

Q&A: What Businesses Need to Know

1. Why is the EU making these changes?

The EU is balancing sustainability goals with economic growth. Feedback from businesses showed that current reporting and compliance burdens were too costly and complex. These changes will boost competitiveness while keeping ESG goals intact.

2. Who benefits from the CSRD changes?

• SMEs and mid-sized companies—80% removed from mandatory sustainability reporting.
• Larger businesses—simplified standards and more time to comply.
• Banks—adjusted Green Asset Ratio (GAR) to prevent unnecessary disclosures.

3. How does the CSDDD simplification help businesses?

• Fewer reporting obligations for supply chain partners.
• Extended compliance timeline (now 2028).
• Legal liability now handled by national laws, not EU-wide rules.

4. What’s new for CBAM compliance?

• 182,000 small importers exempt.
• Reporting and compliance processes simplified.
• CBAM will expand to more industries in 2026.

5. What does the InvestEU expansion mean?

• €50 billion in new investment unlocked.
• Lower compliance costs for funding applications.
• More financing for clean tech, digitalization, and infrastructure.

Read the Full European Commission Q&A ‘Omnibus’ Package Overview

What’s Next?

• The proposals are now under review by the European Parliament and Council.
• Key measures—such as CSRD reporting delays—are expected to be fast-tracked for approval.
• Public feedback on Taxonomy simplifications will be collected before final implementation.

For full details, read the official Omnibus legislative packages:
Omnibus I
Omnibus II

Follow ESG News on LinkedIn