What Is An Omnibus? How The EU Could Reshape Sustainability Reporting

Following calls to reduce the regulatory burden imposed on businesses, the European Union is poised to reform a series of laws passed under the EU Green Deal that required businesses to address climate change. With a goal of reducing reporting requirements, the Omnibus Simplification Package will look at the EU Taxonomy, Corporate Sustainability Reporting Directive, and the Corporate Sustainability Due Diligence Directive.

The holistic approach to reforms has caused confusion and frustration from those involved in the process. Climate activists expressing concern it will undo the gains made during the previous EU term, with others expressing exasperation with the repetitive use of the word omnibus drowning out the content.

Below are answers to five key questions on the Omnibus Simplification Package.

What is an omnibus?

Merriam-Webster defines omnibus as “of, relating to, or providing for many things at once.” In the context of law making, it is a bundle of bills passed at the same time to accomplish a common goal.

The U.S. Congress frequently uses omnibus bills to package multiple spending proposals into a single legislation. Individual spending bills are packaged together and passed in a single vote. The use of omnibus bills by the European Union is less common, but it has occurred.

In 2019, the EU adopted the “Omnibus Directive” amending the New Deal for Consumers passed the year prior. Officially titled the Enforcement and Modernization Directive, the Omnibus Directive amended the Unfair Commercial Practices Directive, the Unfair Contract Terms Directive, the Consumer Rights Directive, and the Price Indications Directive.

What will the Omnibus Simplification Package address?

Following an informal meeting of Council leadership in mid-November, Ursula von der Leyen, President of the European Commission, announced her intention to revamp three key sustainability regulations to reduce the burden on businesses. She stated the Council and Commission will have an omnibus bill that will take “a huge approach to reduce in one step, in all the different fields, what is agreed is too much today. We will look at the triangle Taxonomy, CSRD, CSDDD.”

As part of the European Green Deal, a series of directives were passed by the EU to force businesses to address climate change and report carbon emissions. The goal is to comply with the climate initiates of the Paris Agreement, an international treaty signed in 2015 to prevent climate change by reducing greenhouse gas emissions to net zero by 2050. The EU addressed this through three key legislative actions.

In 2020, the EU adopted the EU Taxonomy for Sustainable Activities. The Taxonomy created a classification system for business and investors to know what activities are considered green or climate friendly.

In 2023, the EU adopted the Corporate Sustainability Reporting Directive. The CSRD created requirements for businesses to report GHG emissions and other environmental, social, and governance actions. For large companies, general reporting begins in 2025 for fiscal year 2024. Small and medium sized companies, non-EU based companies, and companies in high emission sectors will see reporting requirements being drafted and released in 2025.

The final piece, the Corporate Sustainability Due Diligence Directive, was adopted in May 2024. The CSDDD, or CS3D, created additional reporting requirements, as well as legal liability, for companies in relation to their supply chain. The intent is to not only regulate the direct actions of a company, but also assure their suppliers comply with climate and human rights goals.

What is the goal of the Omnibus Simplification Package?

In her 2023 State of the Union address, von der Leyen decried the over regulation of small and medium businesses and called for a 25% reduction in reporting obligations of SMEs. At the time, she did not state specific regulations she wanted to address, but it was assumed to refer to the recently passed CSRD.

As the Omnibus Simplification Package takes shape, the 25% reduction goal has been a recurring theme, although not directly stated. Many experts question how the reduction will be measured and what requirements can be cut.

In the November press conference, von der Leyen stated, “important is, and this is something we agreed also in the informal Council today, the content of the laws is good. We want to maintain it and will maintain it. But the way we get there, the questions we are asking and the data points we are collecting, thousands of them, is too much. Often redundant. Often overlapping. So, it is our task to reduce this bureaucratic burden without changing the correct content of the law that we all want.”

Is Omnibus Simplification Package amending or combining the CSRD, CSDDD, and Taxomony?

There is a lot of speculation relating to the content of the Omnibus Simplification Package. The simple answer is that it is not entirely clear what actions the package will take. Initially, it appeared that the Omnibus Simplification Package would combine the CSRD, CSDDD, and Taxonomy into a single directive. This originated from the language used by von der Leyen in the November press conference. However, some assert this was just a confusion of language.

Looking at the 2019 Omnibus Directive, I believe the Omnibus Simplification Package will follow a similar path of amending, not merging, the CSRD, CSDDD, and Taxonomy through an omnibus package. Interestingly, other attorneys familiar with the process have stated the EU is drafting two versions of the legislation, offering both approaches to the Commission.

Will the Omnibus Simplification Package reopen negotiations on the CSRD, CSDDD, and Taxomony?

Climate activists are growing increasingly concerned that the Omnibus Simplification Package will open the door for negotiations beyond simplifying reporting requirements. For evidence of the likelihood of this outcome, we need only to look at the passage of the CSDDD and the delay of EU Deforestation Regulation.

For EU legislation, three proposals are passed, then negotiated to the final agreement. The proposals come from the European Commission, the European Parliament, and the European Council through individually passed legislation. Those differences in the proposals are then negotiated by representatives of each body to reach a final draft proposal that is then brought back to the original three for final approval. Typically, once the final draft is negotiated and brought back to the bodies, changes can not be made. However, the CSDDD tested that process.

The final draft of the CSDDD, released on January 30, initially appeared poised for easy approval. However, support quickly eroded, leading to 45 days of closed-door negotiations, false starts, and political pressure. Eventually, a watered down version of the final draft was renegotiated by the Council, then sent to the Parliament for approval in April.

The CSDDD was an indicator of a wider pushback on the EU Green Deal. During the European Parliament elections in July, the regulatory burdens on business played a significant role. The conservative European People’s Party ran a campaign that blamed many of the burdens on businesses on the green deal. It worked. The EPP gained seats. Environmentally friendly political parties did not fare as well. The Greens-European Free Alliance and Renew Europe both saw significant losses.

This change in mentality was visible in subsequent votes. In November, a vote to delay the implementation of the Deforestation Regulation resulted in multiple proposals to reduce the scope of the law. Eventually, changes were limited to the delay, but it indicates the likelihood the Omnibus Simplification Package will result in a debate beyond reporting requirements. Especially given the results of the elections and the new direction of the EU.

Insiders believe the initial proposal could come as soon at February 26, 2025, although there is doubt that the Commission can meet that deadline. Once the Commission approves the language, it will then be subject to debate within the Parliament and Council.