2025 was a pivotal year for the European regulatory system governing sustainable development. After years of expanding reporting obligations and due diligence requirements, EU institutions have decided to significantly change their approach.
The outcome is the Omnibus I package, which fundamentally alters the scope and structure of ESG regulations. The aim is to create a more proportionate and cost-effective system that enables climate and social goals to be achieved without placing an excessive burden on businesses. The most visible aspect of the reform is the overhaul of the Corporate Sustainability Reporting Directive (CSRD).
(Significantly) fewer companies required to report on ESG
EU legislators have agreed to significantly reduce the range of companies subject to reporting requirements.
Sustainability reporting will only be required from large companies with over 1,000 employees and a net annual revenue exceeding EUR 450 million. Conversely, listed SMEs and financial holding undertakings have been exempted from these obligations.
According to estimates from the European Commission and expert analyses, this change will reduce the number of reporting entities by up to 80% compared to the original scope of the CSRD.
The ‘stop-the-clock’ mechanism
Another significant element of the package is the temporary suspension of reporting obligations.
The ‘stop-the-clock’ mechanism will benefit the entities that were to report for 2025 and 2026, as well as some wave 1 companies originally required to report in respect of the 2024 financial year.
This is not just a technical adjustment to the schedule, but a deliberate decision to introduce a transition period of several years to enable Member States and businesses to adapt their processes to the new, simplified reporting architecture.
More readable ESG reports
Alongside the reduction in the number of reporting entities, the European Sustainability Reporting Standards have been modernised.
The aim is for these standards to be more transparent and relevant to the market’s actual information needs. In practice, this means placing less emphasis on narrative descriptions, clearly separating mandatory and voluntary requirements, and abandoning sector-specific versions of the standards.
As a result, reports will be more concise, and their preparation will be less burdensome and costly.
Data from subcontractors and business partners
Significant changes also apply to data collection within the value chain.
Previously, companies were required to carry out complex mapping of the entire chain of activities, which, in practice, shifted the reporting burden to smaller entities.
Omnibus I introduces a new risk-based approach. Companies should focus on the links in the chain where potential adverse impacts are most likely to occur or have the greatest scale. The scope of information that they can request from their suppliers has also been limited, which should stabilise the situation for smaller business partners.
Additional time for businesses
The scope of the Corporate Sustainability Due Diligence Directive (CSDDD) has been narrowed down even further. The new thresholds introduced by the interinstitutional agreement mean that only the largest companies — those with more than 5,000 employees and a revenue exceeding EUR 1.5 billion — will be subject to due diligence obligations.
This represents a clear departure from the previous broad concept of regulation, which was intended to cover a significant portion of the market.
The legislature’s motivation is clear: this group of corporations has the greatest impact and operational capabilities, and it would be disproportionate to impose such extensive obligations on smaller businesses.
The package also changes the sanctions and implementation schedule.
Abandoning a harmonised EU-level civil liability regime means such liability will remain subject to national law.
At the same time, a cap on administrative penalties has been introduced, limiting them to 3% of a company’s net worldwide revenue. The application of the due diligence provisions has been postponed until July 2029 and transposition of the directive until July 2028, allowing additional time to prepare for the changes.
Omnibus I means relief and savings for businesses
The reform is not merely technical, and its financial significance is very tangible.
The European Commission estimates that the simplifications introduced by Omnibus I will save businesses over EUR 6 billion per year, primarily through reduced reporting obligations, simplified standards, and reduced audit requirements.
The changes introduced by the package have also been reflected in Poland. On 22 December 2025, the Ministry of Finance published the key points of the amendment to the Accounting Act and related regulations concerning auditing and public supervision. The draft law exempts companies that would otherwise be required to report under the current law from sustainability reporting for 2025 and 2026.
In practice, this represents the full implementation of the EU solutions set out in Omnibus I, aligning with the European trend of alleviating the burden on companies during the restructuring of the system.
The amendment to European ESG law is therefore systemic. The shift towards a more selective and rational approach, away from broad reporting and due diligence requirements, is evidence of the maturation of regulatory policy in the area of sustainable development.
The Omnibus I package does not undermine climate or social objectives; rather, it shifts the focus from the quantity of regulations to their quality. Instead of maintaining a complex system that is difficult to implement, a more transparent and understandable structure is being created that is better suited to business realities.
This marks a new phase for the European Union, in which environmental and social goals can coexist with the need to maintain economic competitiveness.
By aligning its own legislation with the direction set by Omnibus I, Poland is completing this change at the national level.
Together, these changes create a coherent, realistic and more mature operating model that may prove to be the foundation for a more effective and economically sound system of reporting and managing sustainable development in the future.
Any questions? Contact us
