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The EU’s Omnibus Simplification Package (OSP) is a proposed directive to reduce regulatory burdens while maintaining the EU’s Green Deal objectives.
The OSP announced significant updates to sustainability reporting and due diligence regulations, including a two-year deferral for Wave 2 companies under the Corporate Sustainability Reporting Directive (CSRD), which previously applied to many large CIF members. The scope of CSRD is also narrowing to firms with over 1,000 employees and either €50M in turnover or €25M in assets, reducing affected companies by 80%. During the pause, disclosure requirements will be reassessed to ensure practicality, while ‘limited assurance’ will remain with the phase-in of ‘reasonable assurance’ removed.
A key development for SMEs is the elevation of the Voluntary Sustainability Reporting Standard for SMEs (VSME) into an official EU standard via a delegated act. This legally recognised framework will significantly reduce data burdens—from around 1,000 to just 100 data points—with Basic and Comprehensive modules available to suit company size and capacity.
The Corporate Sustainability Due Diligence Directive (CSDDD) is also being streamlined, concentrating due diligence on direct business partners, reducing assessment frequency to once every five years, and removing EU civil liability conditions while preserving victims’ rights. Compliance timelines are being extended to 2028, with supporting guidelines due in 2026.
Additional simplifications to the EU Taxonomy include the introduction of a financial materiality threshold and reductions in reporting complexity, particularly in the “Do No Significant Harm” criteria. Lastly, small importers will be exempt from some Carbon Border Adjustment Mechanism (CBAM) obligations, and revisions to the InvestEU Regulation will unlock €50 billion in investment by easing reporting demands.
Legislative Process & Timeline
- The OSP remains a proposal, requiring approval from the European Parliament and Council of the EU.
- Even in an optimistic scenario, ratification could take 4 to 7 months.
- Member States will have 12 months to transpose the directive into national law after its adoption.
The Omnibus Simplification Package (OSP) seeks to streamline sustainability reporting; however, its legislative process is still ongoing. Companies should proceed with caution, maintain momentum on strategic CSRD preparations, and closely monitor political developments to mitigate compliance risks and potential disruptions.
For businesses that were previously subject to CSRD but may now fall below the newly proposed thresholds, the recommended course of action is to continue reporting, as compliance remains a legal obligation. At the same time, they should assess the VSME standard, identifying ‘no-regret’ actions to ensure resources are allocated efficiently and unnecessary expenditure is avoided.