On 26 February 2025, the European Commission adopted a comprehensive set of legislative proposals—labelled Omnibus I and II—designed to recalibrate sustainability-related and investment regulations in a more growth-friendly and proportionate manner. These proposals, based on the recommendations of the Draghi report and outlined in the recent Competitiveness Compass, aim to cut red tape, enhance competitiveness and unlock economic potential across the EU. Key measures include simplifying the Corporate Sustainability Reporting Directive (CSRD) by significantly narrowing its scope to cover only large companies with over 1,000 employees and streamlining the European Sustainability Reporting Standards (ESRS). This is expected to reduce the number of companies in scope by 80% and save an estimated €4.4 billion annually. The Corporate Sustainability Due Diligence Directive (CSDDD) will also be modified to delay implementation deadlines, reduce obligations regarding indirect business partners, and align requirements more closely with the CSRD. Reporting intervals will shift from annual to every five years, and a voluntary sustainability reporting standard (VSME) will be introduced to shield SMEs from excessive data requests. Changes to the EU Taxonomy include simplifying reporting templates (reducing data points by nearly 70%), introducing thresholds to exempt reporting on non-material activities, and enabling voluntary partial alignment reporting for companies under certain revenue thresholds. 

In terms of trade, the Carbon Border Adjustment Mechanism (CBAM) will be revised to exempt small importers—approximately 90% of declarants—from compliance requirements, while still covering over 99% of embedded emissions. Lastly, amendments to the InvestEU Regulation aim to cut administrative costs by €350 million and unlock up to €50 billion in additional public and private investment by simplifying reporting requirements and easing access for SMEs and other recipients.