The Sustainability ‘Omnibus’ - what is it, and what does it mean for companies?

The President of the European Commission Ursula von der Leyen created a bit of a stir recently at an informal meeting of heads of state in Budapest, by mentioning the idea of introducing an ‘omnibus’ instrument to cut sustainability-related red tape. Such an instrument (the exact legislative form is yet to be confirmed) would amend certain sustainability legislation in order to streamline requirements. In particular, sustainability reporting and due diligence requirements under the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CS3D) and EU Taxonomy, although there may be others.   

Von der Leyen said (see especially 2:07 – 3:30) that: “The content of the law is good. We want to maintain it and we will maintain it. But the way we get there, the questions we are asking, the data points we are collecting — thousands of them — is too much. Often redundant, often overlapping. So it’s our task to reduce this bureaucratic burden without changing the correct content of the law that we all want.” 

This comes at a time when the EU is increasingly wrestling with a perceived lack of competitiveness. In her State of the Union speech in September 2023, von der Leyen announced proposals to cut reporting obligations on companies by 25% at EU level, and called on Member States to match it at national level. EU leaders have reinforced this with a recent call for “concrete proposals on reducing reporting requirements by at least 25 percent in the first half of 2025”, and “a simplification revolution” to ease regulatory burdens. 

This call for competitiveness follows on from a number of reports such as the Letta Report on the future of the single market, and the Draghi Report on EU competitiveness, in which the Commission had a hand and of which EU leaders and industry are supportive. The Commission has also spent several months touring through Member States to actively collect ideas and feedback on the proposals for the next parliamentary term, to move from a ‘Capital Markets Union to a Savings and Investments Union’, which presumably includes the question of cutting bureaucratic tape.

It is not yet clear how far an omnibus instrument might go. They typically introduce limited changes, but the appetite to reopen the requirements imposed by sustainability reporting and due diligence generally in the name of competitiveness might see some more substantive changes introduced. Non-EU countries within scope of EU reporting requirement may also look to their political leadership to bring pressure to bear to try to ease burdens.  

Any changes the omnibus instrument introduces may increase uncertainty in the short and medium term. Companies are still in the process of responding to the phased introduction of sustainability requirements under the CSRD for example, and any change might mean they have to monitor developments and revisit their approaches. In addition, there is a limited evidence base for what has and hasn’t been working under some of the legislation targeted given it’s still so new, so the supporting rationale for changes may be quite thin in places. However, a reduction in, for example, the number of datapoints the European Sustainability Reporting Standards (brought in under the CSRD) require could help lighten the load on companies considerably. 

The political situation also brings some uncertainty. Germany and France have traditionally driven the EU’s ESG agenda, but the upcoming German election in February, and Macron’s weakness in France, means the overall direction of travel in the coming years is hard to judge. 

The timing of the omnibus instrument remains uncertain, but in or around February 2025 has been reported in some places. 

For companies, this means ongoing uncertainty, with the possibility of some limited reductions in reporting and due diligence requirements. In the meantime however, preparations should continue as there is no guarantee that an omnibus instrument, if it does come about, will deliver more than a streamlining of existing requirements.