EU Omnibus Regulation: what do we know so far?

The new European Commission is expected to publish its Annual Work Programme for 2025 on 11 February 2025, which will outline key actions for the year, including new proposals and reviews of existing legislation - see Register of Commission Documents for “Possible items for College agenda 11 December 2024 – 5 March 2025”. 

According to that Register, the “Omnibus simplification package” is expected to be published by Executive VP Stéphane Séjourné on 26 February 2025. 

The idea of an Omnibus Regulation was first mentioned by Ursula von der Leyen on 8 November when EU heads of state and the Commission president met in Budapest to discuss EU competitiveness and the Draghi report. The Budapest Declaration on a New European Competitiveness Deal called on the Commission to launch a “simplification revolution” and “make concrete proposals on reducing reporting requirements by at least 25 % in the first half of 2025, and including red-tape and competitiveness impact assessments in its proposals”.

The Budapest Declaration itself does not mention an “Omnibus Regulation” but in the press conference given by Von der Leyen after the Budapest meeting, she said:

• The Commission is planning to propose an Omnibus Regulation to reduce red tape.
• The Commission will be looking at, for example, the “triangle of the EU Taxonomy Regulation, the CSRD and the CSDDD”.  
• She said that she agrees that what we currently have is “too much” but that “the content of the laws 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, is too much – often redundant, often overlapping – so our task is to reduce this bureaucratic burden without changing the correct content of the laws”.  

It is fair to say that what then ensued was utter confusion as it does not appear that the rest of Von der Leyen’s Commission had been briefed in advance on this plan (see FT coverage here, subscription required). Even the European Financial Reporting Advisory Group (EFRAG), who are responsible for advising the Commission on the CSRD disclosure standards, have apparently asked the Commission to clarify what they are planning to do with the Omnibus package, warning that uncertainty is not good for business (see Environmental Finance coverage here, subscription needed). A group of NGOs, coordinated by WWF and Frank Bold and including ClientEarth, Milieudefensie, ShareAction and BankTrack, have issued a joint statement urging EU policymakers to focus on the implementation of the CSRD rather than deregulation measures (see here).

Further confusion was caused when an online article (see here) suggested that the Commission was planning to “merge” the CSRD, CSDDD and Taxonomy Regulation. However, nothing the Commission has said so far indicates a plan to merge that legislation. It would appear that the plan is just to simplify some of the disclosure requirements without altering the main content of the legislation.  

At this stage, it is still very unclear what changes exactly the Commission is proposing to make to the CSRD, CSDDD and Taxonomy Regulation and in what format. 

The Commission has used the concept of an “Omnibus Regulation” before (see here for example) – as a way to amend multiple laws at once – but this is rare and complex. 

Also, it is not known yet whether the Commission is planning to:

• postpone or delay certain obligations;
• introduce certain derogations based on company size; and/or  
• look at the substance of what needs to be reported based on the practical difficulties businesses are experiencing. 

One of the dangers with the Commission’s plan is that – even if the Commission does not want to change the core content of the CSRD, CSDDD or Taxonomy Regulation in its Omnibus proposal – it is still possible that once the proposal is put to the European Parliament and Council for negotiation, one or both of the co-legislators could seek to make wider amendments to that legislation. 

We’ve already seen something similar with the EU Deforestation Regulation (EUDR) last month where the Commission’s proposal was just to delay application of the EUDR by one year but the European Parliament then tried to make other (wider) amendments to the regulation. The Parliament’s attempt with the EUDR failed but that is not to say it would fail again with the CSRD and CSDDD. The centre-right European People’s Party in the Parliament and certain Member States have made it clear they are not fans of the CSRD or CSDDD. As Politico coined it, there is a real risk of this ending up an “omnishambles”.

In the meantime, MEP Axel Voss has been seeking views from businesses and other stakeholders including trade associations via LinkedIn (see here) on how to reduce, streamline, and simplify bureaucratic requirements across legislation, including on sustainability reporting standards. MEP Voss was inviting views until 2 December 2024. Presumably he will then feed those views back to the Commission - even though the Commission itself has not carried out a public consultation on its plans yet. 

KEY TAKEAWAYS 

• All eyes will be on the “Omnibus simplification package” when this is published on 26 February 2025. 
• At present, there is a great deal of uncertainty as to what exactly that package will do and its format. 
• The Commission will have a difficult job balancing the need to reduce red tape and streamline sustainability reporting burdens without straying too far into the camp of deregulation. 
• A number of Commissioners have said that “simplification” does not have to equal “deregulation”. 
• But once the Omnibus simplification package has started the legislative process, this opens up a veritable Pandora’s box, with the European Parliament and/or the Council being able to propose wider amendments to the existing legislation, in particular the CSRD and CSDDD. 
• Which in turn could bring greater uncertainty for businesses that are already in the process of preparing to comply with the new regimes and for investors who need better data to aid with their capital allocation decisions. 
• We are keeping a close eye on developments and will let clients know as soon as the Omnibus simplification package has been published. 

For more information on the new European Commission and some of the other key sustainability initiatives it has planned, see our separate blog post: What does the new European Commission have in store for sustainability?