May 2025
Introduction: The Rationale Behind the Omnibus Package
The European Union’s sustainability agenda has taken concrete legislative form through key directives such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). These laws are designed to make companies more accountable for their environmental and social impacts. However, their rollout has revealed significant implementation challenges, particularly for small and medium-sized enterprises (SMEs) and companies operating across complex international supply chains. In response to widespread concerns from businesses and Member States, the European Commission introduced the Omnibus Package, a bundle of reforms aimed at simplifying obligations, harmonising overlapping requirements, and reducing the administrative burden while preserving the original goals of sustainability.
Key Reforms Proposed Under the Omnibus Package
Changes to the CSRD include narrowing its scope so that only large companies, defined as those with over 1,000 employees and a turnover above €50 million or assets exceeding €25 million, fall within its scope. Listed SMEs and financial institutions are mostly exempt under the revised approach. Voluntary SME standards have been introduced to enable small companies to report sustainability data in a simplified manner, with an explicit ban on forcing them to provide data beyond those standards. The number of mandatory data points has also been significantly reduced, and the use of sector-specific standards has been discontinued in favour of a single, sector-neutral standard. Additionally, implementation has been deferred by two years for companies in the second and third reporting waves. The audit requirement has been relaxed, allowing companies to obtain limited rather than full assurance on their sustainability disclosures.
As for the CSDDD, its implementation will be phased in gradually, starting with the largest firms in July 2028. Due diligence obligations are now largely restricted to direct suppliers unless specific red flags emerge further down the chain. The requirement for due diligence assessments has been relaxed, with updates now expected every five years instead of annually. While climate planning remains mandatory, companies are no longer required to implement these plans. Furthermore, the EU has refrained from introducing a harmonised civil liability regime, instead leaving this to national legislation.
ESC’s Perspective: Implementation Hurdles and Policy Gaps
The European Shippers’ Council supports the overall sustainability goals of these legislative instruments but has voiced strong concerns about how the regulations are being executed. One of the primary criticisms is the overload of regulatory obligations. Companies are often required to navigate unclear standards, overlapping deadlines, and inconsistent implementation timelines, which has led to rising compliance costs and operational uncertainty. Delays in the publication of technical standards and the lack of consistent national transposition have further exacerbated these challenges.
ESC also warns that the new due diligence rules risk disrupting supply chains, especially in developing countries. Some EU companies have begun to disengage from high-risk regions to avoid compliance complications, which may end up harming rather than helping small producers. Foreign suppliers in these regions are increasingly reluctant to work with European firms due to what they perceive as disproportionate demands and intrusive reporting requirements.
Another critical issue identified by ESC is the lack of legal clarity. Although companies are legally obliged to take action, there is often little guidance on what constitutes sufficient due diligence or compliance. This exposes businesses to legal uncertainty and leaves room for inconsistent interpretation by Member States. ESC has called for practical guidelines and harmonised definitions to support consistent implementation across the EU.
Toward a Coherent Legal Framework
ESC advocates for the Omnibus Package to go beyond reducing bureaucracy by serving as the foundation for a coherent EU sustainability framework. At present, legislation such as CSRD, CSDDD, the EU Deforestation Regulation (EUDR), the Forced Labour Product Ban (FLPB), and the Carbon Border Adjustment Mechanism (CBAM) define compliance criteria and value chain responsibilities in divergent ways.
ESC proposes that the CSDDD be positioned as the central regulatory cornerstone, anchoring the EU’s various sustainability laws to internationally recognised due diligence standards such as those developed by the OECD. Doing so would promote internal coherence, improve enforceability, and support global alignment.
Proposed Structural Improvements
To support more effective implementation and foster international competitiveness, ESC recommends a series of structural reforms. First, the EU should clearly define minimum and maximum due diligence requirements, scaled according to company size and risk exposure. Second, businesses need at least 24 months’ notice before new obligations come into force, ensuring that they have sufficient time to prepare. Third, the CSRD should be streamlined to prioritise one unified reporting standard, focused on double materiality.
In addition, ESC encourages policymakers to adopt a reward-based approach rather than relying solely on penalties. Companies that go beyond basic compliance should benefit from trade facilitation measures or preferred treatment in public procurement.
Conclusion: The Future Role of the Omnibus Package
The Omnibus Package marks a critical turning point in EU sustainability policy. Its success depends not only on how much regulatory burden it lifts but also on how effectively it builds a coherent and actionable framework. If implemented well, it can help the EU maintain its sustainability ambitions while also ensuring that the path to compliance is practical and proportionate for businesses of all sizes.
This reform package should not be seen as the conclusion of regulatory debate, but rather as the beginning of a smarter, more strategic phase in sustainability governance, one that aligns ambition with implementation and positions Europe as a global leader in sustainable trade and corporate responsibility.
Recent Developments as of May 2025
In April 2025, the “Stop-the-Clock” Directive officially delayed CSRD reporting obligations by two years for certain companies, offering a critical reprieve for Wave 2 and Wave 3 businesses. Meanwhile, narrowing the scope of sustainability reporting may undermine transparency and stakeholder trust. Further, the European Parliament is reviewing additional reductions to reporting scope that could significantly affect coverage. Updates to the Carbon Border Adjustment Mechanism (CBAM) are also on the table, including exemptions for low-volume importers and simplified methodologies for calculating carbon intensity. These changes reflect an ongoing balancing act between ensuring compliance feasibility and preserving the transformative potential of the EU’s Green Deal.