The EU rejects the omnibus initiative!
At the beginning of February, the EU Commission published a proposal to simplify various regulations, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy, also known as the Omnibus Initiative. This first proposal has now been rejected by the Commission with 309 votes in favor, 318 against and 34 abstentions!
Omnibus initiative
Due to ongoing criticism from companies and politicians, the omnibus initiative should simplify the currently very extensive and complex compliance requirements of the regulations for companies and lower the entry threshold, particularly in order to increase Europe's competitiveness. According to the proposal, the involvement of the CSRD is to be drastically reduced, for example, by only affecting companies with more than 1,000 employees (one of three criteria). As part of the changes to the CSDDD, the amount of information to be submitted by smaller companies in the supply chain should also be reduced. In addition, revised reporting forms of the EU taxonomy should be published.
Implications for companies
Although the proposals of the Omnibus Initiative have been praised from many sides, the Commission's current timetable is putting companies under immense pressure. Companies that are currently still assuming that the CSRD will be included cannot plan concretely whether they will also be affected by the regulation in the future. In addition, the current negotiations in the EU Parliament indicate that the original demands will be partially nullified in February. According to the European People's Party (EPP), the threshold of 1,000 employees is to remain, but the second criterion of turnover is to be adjusted to 450 million euros.
The current rejection of the omnibus initiative does not affect the substantive changes to the EU taxonomy. The Commission had already adopted a new delegated act on July 4. This came into force 20 days after publication in the Official Journal of the EU and is applicable from January 1, 2026 for reporting on the 2025 financial year. Although this new legal act is part of the more comprehensive reform of sustainability reporting regulations, it is treated separately from the omnibus procedure in legal terms.
Critical appraisal
From a sustainability perspective, the rejection of the omnibus initiative by the EU Parliament is seen as a setback for the credibility and coherence of European climate policy. Although the package was primarily intended to reduce bureaucracy, the decision shows that EU institutions continue to have difficulties in combining economic competitiveness and sustainable transformation in a balanced way.
Although the originally planned simplifications would have slowed down the implementation of CSRD and CSDDD, they would have created more legal certainty and reduced the risk of small and medium-sized enterprises being overburdened. As a result of the rejection, the regulatory framework remains complex, unclear and difficult to manage - which could paradoxically hinder the practical implementation of sustainable corporate governance. Instead of promoting a pragmatic dialogue between sustainability and business, the EU threatens to further deepen the polarization between environmental protection goals and business reality with this decision. Clear and transparent communication is now necessary in order to convey the direction in which ESG-related disclosures will develop in the coming years. This is the only way that companies can plan for the medium and long term without spending unnecessary time and resources on regulations that may be withdrawn.
Continuation
The negotiations between the EU Parliament and the Council on a final omnibus package have been postponed. Parliament's next vote on the omnibus package is scheduled for November 13.
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