On 26 February 2026, the European Commission announced a package of proposals intended to simplify EU rules related to sustainability reporting (CSRD) and due diligence (CS3D). According to the announcement, this initiative aims to reduce the regulatory burden on businesses and enhance the EU’s global competitiveness.
In this article we will discuss the main points relevant to business, as well as the expected next steps.
What changes has the Commission proposed as part of the Sustainability Omnibus legislation package?
The package contains the so-called Omnibus I (COM/2025/80 final) and Omnibus II (COM/2025/ 81 final) proposals. Omnibus I includes the following main points:
1. A proposal for a directive regarding the postponement of certain deadlines, namely:
- Postponing CSRD reporting deadlines by two years for so-called “wave 2” and “wave 3” companies. Thus, large companies that should have reported sustainability information for 2025 in 2026 can expect postponement and an obligation to publish the first reports for 2027 in 2028.
- Postponing the transposition deadline of the CS3D by one year, from 2027 to 2028
2. Another proposal for a directive amending the CSRD and the CS3D (other amendments not concerning the implementation deadlines)
3. A proposal for a regulation amending the Carbon Border Adjustment Mechanism
Omnibus II is a proposal for a regulation amending the InvestEU Regulation.
What will the next steps be?
The legislative proposals will now be submitted to the European Parliament and the Council for consideration and adoption. The changes will enter into force once EU legislators have reached an agreement on the proposals and after publication in The Official Journal of the European Union. Furthermore, the agreed changes will have to be transposed into national laws. The Commission invited the European Parliament and the Council to prioritise the Omnibus packages, particularly the proposal postponing certain disclosure requirements under the CSRD and the transposition deadline under CS3D.
In practice, this means that, most likely, we can expect a postponement of the application deadline for the existing rules relating to companies that fell under the scope and were to reportunder CSRD on 2025 data in 2026.
Discussions will follow on how to amend the scope of companies this applies to, reporting and due diligence rules.
For the CS3D, this means that transposition to national laws will most likely be put on hold.
What are the proposed simplifications of CSRD?
If the proposals are adopted, CSRD reporting requirements would only apply to large undertakings that have more than 1000 employees and either a turnover above EUR 50 million or a balance sheet total above EUR 25 million. This correcponds to a 75% reduction in the undertakings in-scope.
The Commission plans to revise the ESRS to substantially reduce the number of data points and clarify unclear provisions withing 6 months after the prooposed amendments to the CSRD reporting framework entry into force.
According to the proposals, the Commission will adopt a voluntary reporting standard for companies no longer in the scope of the CSRD. Banks and other companies falling into the scope of the CSRD could request only the information indicated in this voluntary standard from companies in their value chains.
It is proposed that sector-specific standards be abandoned also to alleviate reporting burden.
It is also proposed to remove the possibility of moving from a limited assurance requirement to a reasonable assurance requirement of sustainability reporting.
What are the proposed simplifications of CS3D?
In addition to postponing the requirements, overall sustainability due diligence requirements are significanlty simplified and consequences for non compliance are softened:
- The companies are relieved from the obligation to systematically conduct in-depth assessments of adverse impacts that occur or may occur in value chains at the level of indirect business partners. Primary due diligence obligations now relate only to direct business partners and complete due diligence with respect to the value chain would only only be required in cases where the company has plausible information suggesting that adverse impacts have arisen or may arise there.Suppliers with less than 500 employees are excluded from this requirement.
- The obligation to terminate the business relationship where adverese impact was detected and could not be corrected, is removed.
- Compliance monitoring now has to be done every five years rather than annually.
- Net-zero transition plans must be adopted, but no longer need to be implemented. Instead the plan just needs to include “implementing actions”.
- EU-level civil liability is removed and certain access to justice facilitations, e.g. by NGOs and trade unions are deleted.
Penalties for non-compliance are no longer tied to the company’s net worldwide turnover.
Athough the announced changes were highly anticipated, it is worth remembering that these legislative proposals still need to be adopted (and can be amended) by the European Parliament and the European Council. The proposal has sparked considerable political debate among member states, so further amendments are likely before a consensus is achieved. Businesses will need to stay informed about the final outcomes and assess how any changes might affect their operations.
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Contact the authors:
Co-head of Sorainen ESG team, Counsel, Lithuania
vitalija.impoleviciene@sorainen.com
Senior Associate, Latvia
Associate, Estonia
