EU Omnibus Update – Recent Developments relating to CSRD and CSDDD – “quick fix” and more

Wave One companies to enjoy relief from some reporting under the Corporate Sustainability Reporting Directive (CSRD)

On 13 May 2025 during a meeting of the Committee on Legal Affairs of the European Parliament, a spokesperson for the European Commission confirmed that the Commission plans to adopt a “quick fix” delegated act.  The delegated act would oblige Wave One companies to continue reporting but will implement a two-year delay for the phase-in provisions under the European Sustainability Reporting Standards (ESRS).  In summary, we understand that, if passed, companies would not be required to disclose the following until financial year 2027:

• for all Wave One companies, (i) the anticipated financial effects of risks and opportunities relating to climate change (E1), pollution (E2), water and marine resources (E3), biodiversity and ecosystems (E4), resource use and circular economy (E5); and certain information and datapoints relating to own workforce (employee) (S1); and 
• for Wave One companies or groups with 750 or fewer employees, scope 3 emissions and total GHG emissions, and information and/or datapoints (as applicable) under biodiversity (E4), own workforce (S1), value chain workers (S2), affected communities (S3) and consumers (S4).

The rationale for this “quick fix” directive is that although Wave One companies may be obliged to report now, some of these companies may no longer be in scope for CSRD following the changes being proposed in the omnibus simplification package.  We look forward to seeing the official proposed directive from the Commission soon.

We have heard that this “quick fix” directive is likely to be adopted in June 2025 and the leaked draft refers to it being in force on third day following publication in the Official Journal of the EU. No further “quick fixes” are currently expected.

“Stop-the-clock” Transposition Status

France, Luxembourg and Poland have already started the process of transposing the “stop-the-clock” directive:

• France: (Transposed) In April 2025, the French government passed a law amending the implementation deadlines for the CSRD under French law with the ‘Stop-the-clock’ Directive.  Read more here.
• Luxembourg: (In Progress) On 6 May 2025, the Luxembourg government published an initial draft law proposing amendments reflecting the new deadlines under the “stop-the-clock” directive. We have no further information as to when this process is expected to be finalised.
• Poland: (In Progress) In May 2025, the Polish Ministry of Finance prepared a draft law reflecting the new timelines under the “stop-the-clock” directive. We have no further information as to when this process is expected to be finalised.

Omnibus simplification package negotiations continue

The Commission has indicated that it wants the details of the omnibus simplification package to be finalised as soon as possible.  The Council has called for a high level of ambition and for them to be finalised as soon as possible in 2025.  Consensus does not yet seem to be in sight and a number of groups (including Member States and leaders of Member States) have made their views known. More detail on the Commission’s proposals can be seen in our briefings here.  Below we set out recent relevant updates.

• On 8 May 2025, a group of legal scholars wrote to the Commission to advise against changes proposed to Article 22 of the CSDDD in the omnibus simplification package.  The letter refers to the removal of the language “put into effect” in relation to transition plans.  The concerns highlight that (i) without mandating corporate transition plans, the states’ legal obligation to regulate corporate greenhouse gas emissions would not be met; (ii) the internal market would fragment and litigation risk would increase and (iii) disclosure without follow through may increase companies’ liability exposure. 
• On 8 May 2025, the European Central Bank (ECB) published its own initiative opinion on the omnibus amendment proposal. Whilst the ECB supports the Commission’s holistic approach to enhancing European competitiveness, it is important to “strike the right balance” to ensure that the benefits of sustainability reporting for the European economy and the financial system are retained whilst ensuring the framework is proportionate.  It notes that harmonised rather than fragmented individual data collection, and interoperability with international standards, will avoid unnecessary compliance costs for companies and users of data.The ECB sees “the availability of high-quality sustainability-related information, at both granular and aggregated levels” as essential in order to identify, assess and manage ESG-related financial risks and for it to supervise banks and insurance companies. It makes the argument that banks and insurance companies need to collect data in order to enable their risk management activities and processes.  The ECB also expresses concern about the changes to Article 22 of CSDDD in relation to transition plans and the resulting ambiguities.
• On 5 May 2025, a mark-up of the Commission’s proposed amendments on corporate sustainability reporting and due diligence requirements was leaked showing the comments of Belgium, Bulgaria, Czechia, Germany, Estonia, Spain, Italy, Latvia, Luxembourg, Netherlands, Portugal, Slovakia, Finland and Sweden. Of course this does not contain comments from all Member States but suggestions include increasing the threshold for companies in scope for CSRD to apply to undertakings with an average of more than 1000 employees and a net turnover above EUR450 million.
• At the end of April, under the German coalition agreement, the German government agreed that the German Supply Chain Act (LkSG) should be abolished. 
• On 21 May 2025, the Commission announced a fourth omnibus proposal creating a new category of small mid-caps to ease compliance obligations and free resources for growth and investment across the Single Market.  (The third omnibus was focused on simplifying the Common Agricultural Policy.)

  The Commission recognises that SMEs which grow to have more than 250 employees currently face a sharp increase in compliance obligations. A new category therefore allows small mid-caps (companies with fewer than 750 employees and either up to €150 million in turnover or up to €129 million in total assets) to access certain SME benefits, such as derogations under GDPR and prospectus rules.

  The next omnibus package, tentatively scheduled for June 2025, will focus on defence and reaching the investment goals set out in the White Paper. The Commission has also proposed postponing the implementation of the EU Battery Regulation by two years, giving companies and third party verifiers more time to prepare and comply with the rules.

• Following a complaint made in April, on 23 May 2025, the EU Ombudswoman has opened an inquiry into the application of the Better Regulation Guidelines to the omnibus proposals.  The complainants argued that the Commission did not follow key procedural requirements, such as public consultation and impact assessment and did not provide a proper justification for not doing so.  The Ombudswoman has no legal enforcement powers but can issue recommendations which can influence future lawmaking.

Simplification and streamlining of sustainability reporting and due diligence is widely welcomed in the EU.  But we must not forget one of the drivers for the CSRD and CSDDD: investors need access to quality data which is comparable and reliable and financial institutions (banks and insurance companies) also need data in order to fully understand sustainability-related risks.  The simplified CSRD will need to balance cutting “red tape” and simplification with ensuring that investors and financial institutions still get the data they need.

Stay tuned for further updates on CSRD, CSDDD and the omnibus simplification package.

Our global Sustainable Finance & Investment group brings together a multidisciplinary global team that provides clients with best-in-market support.  We are following developments relating to ESG regulation, so please get in touch if you would like to discuss.

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This note is intended to be a general guide to the latest ESG developments. It does not constitute legal advice.

Authored by Rita Hunter, Emily Julier and Jessica Dhodakia.