In the European Union's (EU) push for competitiveness, it risks trading long-term sustainability for short-term economic gains. As seen on February 26, 2025, the European Commission proposed the Omnibus Act, a legislative package simplifying recent progressive EU environmental regulations, namely, its due diligence and reporting obligations, to enhance competitiveness and boost investment. It follows the Draghi report from September 9, 2024, which highlighted an urgent need for economic development to excite the lagging European economy since the 2008 Global Financial Crisis and in the face of President Donald Trump's announcement of increased tariffs on European products. In turn, the Omnibus Act echoes the report's call for a regulatory framework aimed at strengthening European competitiveness by reducing business costs to ensure industries, like aluminum and steel, even wines and spirits, survive a potential 200 percent US tariff increase.
The Omnibus Act's objectives seem not only positive for the economy, but also the environment, as Ursula von der Leyen, President of the European Commission said, “European businesses will benefit from lighter rules on sustainable finance reporting, sustainability due diligence, and taxonomy. This will make life easier for our companies while ensuring we remain firmly committed to our decarbonization goals.” According to the European Commission, reducing administrative burdens would result in estimated savings of €6.3 billion per year and mobilize an additional €50 billion in public and private investments to support strategic priorities.
The primary laws affected by these changes are the CSRD (Corporate Sustainability Reporting Directive of December 14, 2022) and the CSDDD (Corporate Sustainability Due Diligence Directive of June 13, 2024), whose modifications complement how companies will no longer be required to declare their alignment with the European green taxonomy.
The CSRD Directive aimed at increasing the transparency and responsibility of companies regarding their ESG impact. Companies must publish certain information related to their environmental and social impacts. The Omnibus Act provides for restricting its scope to companies with more than 1,000 employees and generating a turnover of at least 50 million euros, which reduces its scope by 80 percent, thus excluding SMEs, which may, however, comply on a voluntary basis. In addition, CSRD reporting will be simplified by removing certain publication obligations deemed non-essential.
The CSDDD aimed at promoting sustainable and responsible business conduct in their operations and chain of activities in the law itself. It requires companies to identify and consider the risks related to human rights and the environment in their activities. The Omnibus Act provides for easing these obligations by limiting periodic assessments of direct trading partners to once every five years instead of once a year as is currently the case. It also reduces the information requirements requested from SMEs and removes European civil liability, replaced by liability regimes specific to the Member States.