The Omnibus Simplification Package, launched by the European Commission in February 2025, aims to substantially reduce the compliance burden for corporate sustainability in the EU. The package focuses on amending the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy Regulation, along with making adjustments to the Carbon Border Adjustment Mechanism (CBAM).
As part of the legislative process for the Omnibus, the European Parliament, Commission, and Council will negotiate on proposed amendments. The European Parliament’s rapporteur presented a draft report in June 2025 outlining a series of proposals. Shortly after, on June 23, 2025, the Council of the European Union endorsed its negotiating mandate. The mandate will serve as the Council’s negotiating position in discussions with the Parliament and Commission to determine the final form of the EU’s sustainability compliance framework.
Competing Proposals for Simplification
When putting forth the Omnibus Simplification Package, the European Commission aimed to remove around 80% of companies from the scope of CSRD and proposed scope reductions that could reduce administrative costs by approximately €4.4 billion annually. In its June 23 negotiating mandate, the Council advocated for even more substantial reductions in scope, particularly by reducing CSDDD applicability thresholds and softening due diligence obligations. The European Parliament’s Rapporteur put forward the most far-reaching cutbacks, including proposing higher, uniform thresholds across CSRD, CSDDD, and the EU Taxonomy; the elimination of the obligation to adopt climate transition plans; and the requirement for EU-level harmonization of standards. These proposals by the Rapporteur signal a strong push for deeper and consistent deregulation, reflecting an approach highly responsive to industry complaints about over-regulation and fragmentation.
While progressive parliamentary groups have already signaled opposition to the Rapporteur’s significant scaling-back efforts, the latter’s position nevertheless gives a good indication of the general direction the Parliament’s negotiating position might take. The Parliament will vote on its final negotiating position in fall 2025, after which the legislative process will enter the “trilogue” negotiations. The collective trajectory of the Simplification proposals suggests a significant narrowing of the directives’ scope and a relaxation of some substantive requirements.
The following charts highlight key elements of the amendments proposed by the European Commission, the Rapporteur of the Parliament, and Council of the European Union respectively.
CSRD
*Small and medium-sized enterprises
CSDDD
Taxonomy
Interoperability of ISSB S1 and S2 with EU Framework
While the exact confines of the EU’s corporate sustainability compliance framework are still being determined, other jurisdictions have converged around the International Sustainability Standards Board (ISSB) IFRS S1 and S2 standards.[2] Seventeen jurisdictions globally have finalized their adoption of the IFRS Sustainability Disclosure Standards, and another nineteen are moving toward adopting the standards.[3]
The ISSB has attempted to drive alignment between the CSRD (and its dedicated European Sustainability Reporting Standards, ESRS) and ISSB standards to render them interoperable.[4] In their Omnibus Simplification proposals, the Commission, Council, and Parliament Rapporteur all emphasized that any revisions to CSRD should not undermine interoperability with global reporting standards and should seek to increase interoperability where possible.[5]
The table below highlights some key distinctions between EU CSRD/ESRS and ISSB IFRS S1 and S2 standards.
Additional differences between the EU and ISSB standards include the requirements for disaggregation of Scope 1 and Scope 2 GHG emissions; the precise methods of carbon accounting; the requirements for disclosing capital deployments related to climate transition plans; and requirements for disclosures related to energy consumption, internal carbon pricing schemes, and GHG removals.
Despite key distinctions between the CSRD/ESRS and ISSB standards, there is significant momentum toward increased interoperability and the reduction of duplicative reporting requirements across jurisdictions. The more expansive EU framework will continue to be at the forefront of international sustainability and due diligence reporting, with requirements reaching beyond those in the ISSB standards. But the Omnibus Simplification Package is likely to reduce the gap between CSRD and ISSB and simplify reporting for entities operating across jurisdictions.
[1] At the same time that the Omnibus Simplification Package is being negotiated, the European Financial Reporting Advisory Group (EFRAG) is pushing forward on its efforts to simplify the European Sustainability Reporting Standards (ESRS), which underpin the CSRD’s disclosure requirements. The EFRAG continues working toward a 50% reduction in mandatory data points and a simplification and clarification of the double materiality assessment process. EFRAG was mandated to provide technical advice on simplification efforts to the European Commission by October 31, 2025.
[2] IFRS S1 is a broad-ranging standard for sustainability‑related financial disclosures that mandates disclosure of all material information that could reasonably be expected to impact cash flows, financial positioning, and cost of capital. IFRS S2 focuses exclusively on disclosure of climate-related risks and opportunities, including Scope 1, 2, and 3 emissions.
[3] These jurisdictions include Australia, China, Brazil, Canada, Japan, Mexico, and the United Kingdom.
[4] In 2024, the IFRS Foundation and EFRAG published guidance to illustrate the alignment achieved between the ISSB standards and the ESRS. The guidance describes the alignment of requirements including on materiality, presentation, and disclosures for various sustainability topics. The ISSB has been engaging with EU representatives to advocate for maintaining and increasing interoperability of the two standards through the Omnibus Simplification Package.
[5] IFRS S2 is also currently undergoing revisions. On April 29, 2025, the ISSB announced proposed amendments aimed at easing Scope 3 emissions reporting requirements for companies. Specifically, the revisions would offer companies relief from reporting Scope 3 emissions related to derivatives, certain financed or facilitated transactions, and insurance activities. The proposals also introduce flexibility in choosing an emissions measurement method beyond the Greenhouse Gas Protocol for calculating carbon footprint and allow the use of alternative Global Warming Potential values.
[6] While IFRS S1 covers general requirements for sustainability-related financial information and requires disclosure of material sustainability risks beyond climate, prescribed disclosure requirements for topics other than climate have not been issued.
[7] Under the current rules, there was an obligation to assess and potentially implement reasonable assurance standards by October 1, 2028. The European Commission and the Council of the EU both proposed to keep CSRD reporting subject to limited assurance only and to cancel the transition to reasonable assurance.
[View source.]
