The EU Omnibus Regulation: Simplification or new hurdles for sustainability reporting?

CSRD, ESRS | 15. January 2025
Phillip Blumenthal
Head of Sustainability

Last week we discussed with Phillip Blumenthal the emerging “omnibus” concept for European sustainability reporting and talked about what “omnibus” means and whether the goals that come with it are achievable or even understandable. The question of how companies can respond to these new potential uncertainties was also raised.

Below you will find a summary of this conversation. The full transcript can be found here:

1. What does the “Omnibus Regulation” mean?

The European Union is undertaking an ambitious overhaul of its corporate sustainability reporting framework with the introduction of an “Omnibus” regulation. This new regulation aims to consolidate overlapping reporting obligations from the Corporate Sustainability Reporting Directive (CSRD), the Taxonomy Regulation, and the Corporate Sustainability Due Diligence Directive (CSDDD). The promise? A reduction of reporting obligations by 25% by mid-2025.

At first glance, this sounds like a much-needed simplification of a cumbersome system. However, as with any comprehensive reform, the devil is in the details—and many questions remain unanswered about how this goal will be achieved and what it will mean for companies.

2. 25 Percent: An Arbitrary Target?

The European Commission’s promise to reduce reporting obligations by 25% has been met with some skepticism. For one, it is unclear how this figure was determined. There are no signs that the Commission conducted a thorough analysis of which requirements represent the greatest burden or could be removed without concern. Instead, the 25% target appears to be an arbitrary figure intended to convey political determination.

Even if this target is achieved, it does not necessarily translate to a 25% reduction in the effort required by companies. Reporting effort varies greatly: some reporting requirements involve textual descriptions that can be quickly drafted, while others require months of data collection and analysis to finalize numbers and descriptions. Without a nuanced approach to simplification, the Omnibus regulation may reduce the number of requirements but fail to alleviate the actual workload for sustainability managers.

3. Where the Omnibus Regulation Could Simplify Effectively

Despite some reservations about the current process, there are areas where the EU could meaningfully reduce the burden. Below are the areas that Code Gaia believes should be prioritized:

1. Taxonomy Regulation

The detailed criteria of the Taxonomy are ideal candidates for simplification. For many companies, these requirements are so burdensome that they end up reporting zero alignment simply to avoid the effort of proving full alignment. By refining the scope and aligning Taxonomy obligations with ESRS principles, the EU could make the process less redundant and more practical.

2. Supply Chain Assessments

Under the CSDDD, companies are required to comprehensively assess the impacts of their supply chains. Reducing the number of supply chain levels to be analyzed (at least in the initial years of implementation) or prioritizing risks based on revenue or materiality could significantly ease the burden.

3. Assurance Standards

Defining limited assurance standards that reduce documentation of non-critical content could make a real difference. Current reliability requirements cause significant anxiety for companies—not because of public reporting, but because of the labor-intensive process of documenting methods and uncertainties.

4. Sector-Specific Standards

Halting or deferring the development of additional sector-specific standards under the ESRS could prevent further complexity. Companies need clarity, not expanding rule books.

4. Staying the course despite uncertainty

For companies already experienced in esg reporting, our advice is straightforward: stay the course. If your company has committed to implementing the ESRS, continue as planned. The content of the ESRS is likely to remain largely unchanged, even as the regulations are consolidated. Those betting on a significant reduction in reporting obligations might find themselves in a bind if the changes turn out to be less profound than expected.

For those dealing with the Taxonomy, a pragmatic approach could involve minimizing reporting whenever possible. This is not about avoiding responsibility, but about recognizing the limits of an overly detailed framework that often rewards technical compliance over meaningful action.

Currently, the effort required by the EU Taxonomy is disproportionate to its benefits. For companies, this means the high workload does not yet yield significant added value. As a result, many companies remain very cautious in this area. However, the benefits could be significantly increased if the requirements were less demanding.

Finally, companies should aim to harmonize their reporting across regulations. For example, use the material impacts identified under the ESRS related to the upstream value chain to meet overlapping requirements of the CSDDD. This internal streamlining can reduce the burden even before external reforms take effect.

5. Conclusion: A Broader Perspective

The Omnibus Regulation has the potential to address the legitimate concerns of companies grappling with overlapping and duplicative esg reporting requirements. However, achieving this will require more than simply cutting 25% of obligations. True simplification means prioritizing clarity, consistency, and practicality while ensuring that reforms support meaningful sustainability outcomes.

The EU must proceed carefully. Sustainability is a cornerstone of its legislative agenda, and poorly executed reforms could undermine both corporate compliance and public trust. For companies, the best approach is to remain adaptable, informed, and proactive. While the Omnibus Regulation may simplify some aspects of reporting, it is unlikely to eliminate the need for rigorous and thoughtful sustainability efforts.

The promise of an Omnibus Regulation is compelling, but whether it will bring meaningful relief or increase complexity remains to be seen. Until then, the burden of preparation clearly falls on companies. Ultimately, businesses need clarity, consistency, and collaboration. Policymakers should work closely with the private sector to ensure that the new framework not only looks good on paper, but also genuinely supports companies on their path to sustainability.

At Code Gaia, we are already building the perfect omnibus to take SMEs effectively and holistically to their destination: the compliant sustainability report. Our components for this remain the same. Holistic CSRD reporting that guides SMEs through the process step by step, personal support from our experts, secure AI workflows and methodological excellence.

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