Omnibus Law: Impacts and Changes

Last updated: 28 / 04 / 2026

The Omnibus Law is a legislative package, definitively adopted on December 16, 2025. aiming to simplify several sustainability regulations including the CSRD directive on non-financial reporting and the CS3D directive on due diligence.

By raising the applicability thresholds of the CSRD and reducing the scope of the duty of vigilance, the Omnibus package fundamentally transforms the regulatory landscape of sustainability in EuropeDo you want to understand the implications of this legislation, which affects thousands of businesses? Definition, revised thresholds, companies concerned, implementation schedule: ETERNITY Systems explains everything you need to know about the Omnibus law to anticipate its impacts.

Summary

The Omnibus Law in summary

The Omnibus Directive combines into a single initiative the revision of several key texts of the European Green Deal. aiming to strengthen the competitiveness of European companies by easing regulatory constraints.
The text significantly raises the application thresholds of the CSRDThis effectively excludes the majority of companies that were initially targeted. The omnibus law could thus exempt up to 80% of the companies that were initially required to comply.
The duty of vigilance is also restricted : from now on, only companies with more than 5,000 employees and 1,5 billion euros in turnover remain subject to the CS3D directive.
Stepping outside the mandatory scope does not necessarily exempt one from a sustainability strategy to be proven to stakeholders such as partners, banks and investors.

What is the Omnibus Law?

In European Union law, the term "omnibus" refers to a legislative instrument unique which allows the European Commission to simultaneously amend several existing texts in a single procedure.

The Omnibus Law of 2025 which aims to simplify, harmonize and adapt several measures of the 2021 European Green Deal, fits precisely into this logic, as it modifies in parallel:

The CSRD directive (Corporate Sustainability Reporting Directive), which governs the extra-financial reporting of companies.
The CS3D directive (Corporate Sustainability Due Diligence Directive), which imposes a duty of vigilance on human rights and the environment.
The European Taxonomy Regulation, which classifies economic activities according to their sustainability.
The carbon border adjustment mechanism (MACF/CBAM), which taxes imports based on their carbon footprint.

The "Omnibus I" law was definitively adopted by the European Parliament on 16th December 2025 and published in the Official Journal on February 26, 2026 with an entry into force scheduled for March 18, 2026.

Why was the Omnibus Law proposed?

The central objective of the Omnibus Law responds to a strong demand, expressed by several Member States, to simplify European regulations on sustainability standards, to reduce the administrative and financial burden on businesses.

However, many associations denounce this "simplification" which they consider a pretext to dismantle important social and environmental standards.

Its adoption can be explained by three main factors:

An economic context under pressure : the Mario Draghi's report on European competitiveness, published in 2024, pointed to a “normative asphyxia” which would hinder the innovative capacity of EU companies in the face of American and Chinese giants. This report served as the intellectual foundation for the Omnibus project, advocating for a reduction and simplification of the European Green Deal.

A perceived gap with the United States and China: While the United States is embarking on a deregulation of its financial markets and China is not applying the same ESG standards, several European industrialists have warned of a risk of distortion of competition.

A request for simplification for SMEs and mid-sized companies: The CSRD sustainability reporting obligations, in their initial version (threshold of 250 employees), affected a large number of SMEs and mid-sized companies. Faced with the practical difficulties encountered during the first years of compliance, the Commission chose to broaden the scope of application with the Omnibus Law. For example, a mid-sized company with 400 employees operating in the industrial sector previously had to dedicate significant resources to producing a sustainability report compliant with ESRS standards. With the Omnibus Law, it would now be exempt from this binding obligation.

What are the impacts of the Omnibus Law on current regulations?

The Omnibus package affects the entire regulatory architecture of sustainability built by the European Union over the last five years by impacting the four normative pillars which are:

The CSRD

the CS3D

green taxonomy

the MACF.

Impacts on the CSRD (Corporate Sustainability Due Diligence Directive)

Regarding the CSRD, the Omnibus package revises:

The application thresholds

The content of the ESRS standards

Establish the Value Chain Cap.

The revision of the application thresholds

On December 16, 2025, the European Parliament definitively adopted the revision of the CSRD, modifying the following applicability thresholds:

Application thresholds have been revised upwards: Reporting obligations will now apply to companies with both 1,000 employees AND annual net revenue exceeding €450 million. These two criteria are cumulative. Listed SMEs will no longer be subject to the directive. The requirements will therefore primarily affect large companies. This reduces the number of companies concerned by approximately 80%.

The number of companies subject to CSRD reporting The number of companies in the European Union drops from approximately 50,000 to approximately 10,000. This excludes the vast majority of companies initially targeted by the CSRD directive from the mandatory scope.

Specific treatment for subsidiaries of non-European groups: For subsidiaries and branches of groups headquartered outside the European Union, the €450 million revenue threshold is now assessed at the level of each individual entity, and not at the consolidated group level. A European subsidiary of an American group will therefore have to analyze its own situation independently of that of its parent company.

A voluntary alternative for companies that fall outside the scope: Companies with fewer than 1,000 employees that are no longer subject to the CSRD can choose to adopt the VSME standard (Voluntary Sustainability Reporting Standard for SMEs), a simplified and proportionate framework. Unlike the CSRD, the VSME does not require a dual materiality analysis, which significantly reduces the implementation burden.

A delayed publication schedule for wave 2: For companies that remain within the scope of the new thresholds, often referred to as "wave 2," the first publication is postponed. The reports are expected in 2028, covering the 2027 fiscal year.

A transitional exemption for companies in wave 1: Companies already subject to the CSRD (wave 1) that fall below the new thresholds are not immediately released from their obligations. A transitional exemption is planned for the 2025 and 2026 financial years, but its application remains at the discretion of Member States when transposing the directive into their national law.

A lower ceiling on fines: The ceiling for financial penalties applicable in the event of non-compliance is lowered from 5% to 3% of global turnover.

A centralized digital tool to facilitate compliance To support businesses in this transition, EFRAG launched the " ESRS Knowledge Hub", a digital platform that centralizes ESRS and VSME standards, implementation guides, and a dedicated FAQ. It provides a single point of entry for any organization wishing to understand and apply the new reporting requirements.

The content of the ESRS standards

ESRS (European Sustainability Reporting Standards) These are the technical standards that precisely define what a company must publish in its sustainability report. The Omnibus package simplifies the content of ESRS standards by reducing the number of mandatory data points by 60% and completely eliminating optional points. In concrete terms, these are indicators such as energy consumption in kWh, the rate of workplace accidents, the percentage of women in management bodies, or CO₂ emissions by scope.

Furthermore, sectoral standards (applicable to specific industries such as textiles, oil or mining) are eliminated as obligations and replaced by simple voluntary implementation guidelinesFor example, a mining company will no longer be required to publish standardized data on environmental risks related to extraction.

Companies also gain two new flexibilities: they may omit sensitive information (trade secrets, intellectual property)) or invoke a ground of "disproportionate burden".

The European Commission has until 18 September 2026 to transform these proposals into an official delegated act, applicable to the 2027 and subsequent financial years.

The Value Chain Cap

The Omnibus package also introduces the "Value Chain Cap" (value chain ceiling) which governs how large companies can collect data from their subcontractors to feed their own reporting.

Concretely, The Omnibus law sets a threshold of 1,000 employees below which clients can no longer require their suppliers and subcontractors to transmit granular sustainability data. This "SME shield" aims to protect small businesses from an unintended regulatory cascade effect. For example, an agri-food group will no longer be able to contractually require its agricultural suppliers to transmit their ESG data through the regulatory channel.

The text goes even further, stating that any contractual clause requiring a supplier with fewer than 1,000 employees to provide data beyond the VSME standard is now subject to penalties. The impact on large companies is significant, as they will have greater difficulty in accurately documenting their indirect emissions (Scope 3), that is, the emissions generated throughout their supply chain.

The impacts on the CS3D, the directive on the duty of vigilance

The CSRD/CS3D Directive is based on a due diligence principle that requires large companies to identify, prevent, and remedy human rights and environmental abuses in their value chain. The Omnibus CSRD/CS3D Directive significantly reduces the number of companies involved and limits the scope of checks to the direct value chain.

These changes concern:

A drastically reduced scope of application The threshold has been raised from 1,000 to 5,000 employees and from €450 million to €1,5 billion in revenue. Only about 1,000 companies across the European Union remain affected, compared to the 15,000 to 20,000 initially anticipated. In France, this represents approximately 145 companies.

Postponement of the transposition and application The "Stop the Clock" proposal, published in the Official Journal on April 16, 2025, formalizes the one-year postponement of the deadline for transposing and implementing the CSDDD (Convention on Sustainable Development and Sustainable Development). The latter will begin in July 2028.

The scope of the checks Companies would no longer be required to identify risks across their entire value chain (supply chains, second- and third-tier subcontractors, and beyond). Instead, companies must first conduct a scoping exercise across their entire value chain to identify areas where negative impacts are most likely to occur. They must then carry out an in-depth analysis only in these areas, prioritizing their direct Tier 1 partners if necessary. Risks furthest down the supply chain, often the most serious, such as forced labor in mining or agriculture, would therefore fall outside the scope of mandatory due diligence.

The accountability mechanisms Initially, the CS3D provided for a harmonized civil liability regime across the European Union, allowing victims of harm to sue multinational corporations in European courts under common rules. The Omnibus Package eliminates this harmonized regime and leaves each Member State to its own national law. This means that the applicable rules and conditions of access to justice vary from country to country, which can complicate matters for victims.

The climate transition plan The Omnibus Law removes the requirement for companies subject to the CS3D (Sustainable Development and Sustainable Development Contract) to implement a concrete climate transition plan aligned with the Paris Agreement. In the initial version of the CS3D, companies had to demonstrate how their strategy would contribute to limiting global warming to 1,5°C. Following the Omnibus Law, they simply need to indicate whether they have defined such a plan, without any obligation to implement it.

A less intensive monitoring schedule: The monitoring frequency for the vigilance system is changing from annual to five-yearly. Companies will have to reassess their approach every five years instead of annually, which reduces the operational burden associated with the ongoing management of the system.

Specific thresholds for franchises and licenses : the final text introduces appropriate thresholds for companies operating via franchise or licensing agreements by bringing them into the scope of the CS3D as soon as they reach 75 million euros in royalties and 275 million euros in turnover, in order to prevent this economic model from being used to circumvent due diligence obligations.

In the meantime, there is no need to worry about it. ”

The impacts on the European green taxonomy

The European taxonomy is a classification system that makes it possible to determine whether an economic activity is “green” or not.To function, this system requires companies to publish accurate data on the proportion of their activities aligned with European climate objectives.

With the Omnibus LawTaxonomic reporting becomes optional for SMEs and companies that fall outside the new scope of the CSRDIn other words, these companies are no longer required to declare whether their activities are aligned with the taxonomy or not.

This development could reduce the amount of data available to investors wishing to direct their capital towards sustainable activities.

The impacts on the MACF (carbon border adjustment mechanism)

The MACF (Carbon Border Adjustment Mechanism), also called CBAM (Carbon Border Adjustment Mechanism), applies to importers of certain products (steel, cement, aluminum, etc.) to balance carbon costs between European and foreign producers.

As part of the Omnibus I package, a separate regulation (EU 2025/2083), adopted on October 8, 2025, simplifies this mechanism by introducing a de minimis threshold set at 50 tonnes per importer per year. Below this threshold, importers are completely exempt from MACF obligationsDeclaration and purchase of certificates included. This measure exempts approximately 90% of importers, primarily SMEs and individuals. Large importers remain within the scope of the mechanism, and 99% of covered emissions remain subject to the scheme.

Which companies are affected by the Omnibus Directive?

The Omnibus Act concerns companies that remain within the scope of the CSRD (companies with more than 1,000 employees and €450 million in revenue) and CS3D (more than 5,000 employees and €1,5 billion in revenue). These are mainly large multinationals and large listed groups.

Non-European companies are also affected if they reach these new revenue thresholds on the European market

Companies that fall outside these parameters will no longer be required to produce a sustainability report. However, they can choose to use the VSME (Voluntary Sustainability Reporting Standard for SMEs) to structure their this commitment and meet the expectations of their partners and investors.

What is the implementation schedule for the Omnibus Law?

The Omnibus Law followed a precise chronology, structured around European institutional steps and future application dates for businesses. Currently, the Omnibus Law has indeed been adopted, on December 16, 2025, following nine months of negotiations between the Parliament, the Council, and the European Commission.

How to implement the new provisions of the Omnibus law?

The Omnibus Law has been successfully passed, and even if some companies are now exempt from mandatory non-financial reporting, this does not mean they are completely exempt. Business partners, banks, and investors will continue to expect reliable and structured sustainability data. To navigate this regulatory environment effectively, we recommend:

To adopt the VSME standard

To conduct a simplified dual materiality analysis
To draw inspiration from companies already committed

Adopting the VSME standard as a starting point

For companies that fall outside the mandatory scope of the CSRDThe VSME standard constitutes the recommended reference framework. Developed by EFRAG and officially adopted by the European Commission, this voluntary standard is proportionate to the resources of SMEs and mid-sized companies because it covers essential environmental, social, and governance indicators without imposing dual materiality analysis or the certification requirements specific to CSRD.

On the one hand, it allows an SME to structure its CSR approach progressively, starting with a basic module and then evolving towards a complete module when its maturity allows.
On the other hand, she protects her because large clients subject to the CSRD cannot legally require their suppliers with fewer than 1,000 employees to provide data beyond what is stipulated in this framework.

For example, an ETI with 600 employees can structure its first sustainability report using the basic module of the VSME, then move to the full module when its CSR maturity allows it.

Conducting a simplified dual materiality analysis

Dual materiality answers two questions:

What environmental and social issues affect my company's performance?
Conversely, what impact does my activity have on the environment and society?

Before the reform, this analysis required reviewing an exhaustive list of indicators, often long and complex to process without dedicated resources. The new "top-down" approach reverses the logic : we start from the company's business model and work our way up to the issues that are really relevant to it, rather than covering everything by default.

For example, a transport company will start from its dependence on fuel and its CO₂ emissions to identify its priority climate issues, without having to analyze in detail themes that are not closely related to its activity such as water management or biodiversity.

This streamlined approach allows efforts to be prioritized where they have the most value,without mobilizing disproportionate resources.

Drawing inspiration from companies already committed

Companies that were already reporting under the CSRD before Omnibus have accumulated experience This is invaluable for data collection, report structuring, and dialogue with auditors. Observing their practices through published reports, sector feedback, or professional working groups allows you to anticipate the expectations that will be transmitted via the value chain and adapt your own approach accordingly.

Omnibus Law: simplification or a step backward for sustainability?

The Omnibus Law has now been adopted and it tangibly reduces the administrative burden on tens of thousands of European companies., and responds to a real demand for simplification expressed by SMEs and mid-sized companies facing reporting obligations that were too difficult to absorb.

But by reducing the scope of the CSRD by 80% and limiting the duty of vigilance to around 1,000 companies, the European Union:

Mechanically reduces the amount of sustainability data available.
Weakens the traceability of supply chains.
It weakens the tools available to investors to direct capital towards truly sustainable activities.

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Companies that fall outside the mandatory scope are not exempt from a sustainability strategy: their partners, banks and customers will continue to expect concrete evidence of this.

Please note

ETERNITY Systems We offer concrete solutions to help businesses meet these challenges: monitoring and managing reusable packaging, material traceability, centralizing ESG data, and automating regulatory reporting. By transforming sustainability constraints into operational levers, we help every organization, regardless of its size, commit to a sustainable responsibility approach.

FAQ

What is an Omnibus Bill?

An omnibus bill is a single piece of legislation that simultaneously amends several existing laws or directives. In European law, this is a tool used by the Commission to revise regulations covering different areas in a single procedure. The 2025 Omnibus I package is an example, as it simultaneously amends the CSRD, the CS3D, the green taxonomy, and the carbon border adjustment mechanism.

What are the next steps for the Omnibus Law?

The Omnibus I Directive was adopted by the European Council on 24 February 2026 and published in the Official Journal of the European Union on 26 February 2026. It has therefore entered into force. The next steps are transposition by the Member States, with two separate deadlines: no later than 19 March 2027 for the provisions relating to the CSRD, and no later than 26 July 2028 for those relating to the CS3D. In parallel, the European Commission will publish in June 2026 the delegated acts specifying the revised content of the ESRS standards, which define in concrete terms what companies remaining within the scope will have to report.

Does the Omnibus Law abolish the European Green Deal?

No, the Omnibus law does not abolish the European Green Deal.The European Union's major climate objectives—carbon neutrality by 2050 and a 55% reduction in emissions by 2030—remain in force and are not called into question by this legislation. What the Omnibus Law modifies is the scope of companies required to report on their sustainability efforts.

Are there any penalties planned for companies that do not comply with the Omnibus CSRD directive?

Yes, sanctions remain in place for companies that remain within the scope of the CSRD and do not comply with their reporting obligations.Each Member State defines the procedures and amounts in its national law during transposition. For companies that fall outside the new mandatory scope, no regulatory sanctions apply, but the lack of reporting can have commercial and financial consequences, particularly regarding access to financing or public procurement.

About the Author

Anthony ADAM

Communications and Marketing Manager at ETERNITY Systems, Anthony designs strategies and content to promote more sustainable consumption. He is a committed agent of change who combines creativity, rigor, and action to strengthen the visibility and impact of projects related to reuse and the circular economy.