Omnibus I: The Commission's Competitiveness Adjustment
In February 2025, the European Commission published the first Omnibus package — a consolidation of amendments to multiple sustainability regulations designed to reduce administrative burden on EU companies while maintaining the core regulatory architecture of the European Green Deal. The package includes proposed amendments to the CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy Regulation.
The most discussed element is the proposed CSRD amendment, which would raise the threshold for mandatory sustainability reporting from companies with more than 250 employees (under the original CSRD) to companies with more than 1,000 employees. This change would reduce the number of companies required to report under CSRD from approximately 50,000 to around 5,000 — a reduction of approximately 80%.
What the Omnibus Amendment Does and Does Not Change
It is important to distinguish between what the Omnibus I CSRD amendment changes and what it preserves:
- Changed: The mandatory scope for full CSRD reporting is narrowed to large companies with over 1,000 employees. Companies below this threshold are no longer required to produce full ESRS-compliant sustainability reports.
- Changed: The phase-in timeline has been extended, with the original wave 3 (SMEs, listed companies) now indefinitely deferred.
- Unchanged: SFDR obligations for financial market participants remain in full force. Asset managers marketing Article 8 or Article 9 funds must continue to disclose sustainability characteristics in detail, irrespective of Omnibus I.
- Unchanged: EU Taxonomy alignment disclosure requirements for large public-interest entities remain in force.
- Unchanged: Investor-facing ESG disclosure requirements — including PAI reporting under SFDR — continue to apply.
The Investment Implications: Net Negative for Disclosure Quality, Net Neutral for Investment Thesis
For institutional investors, the Omnibus I CSRD scope reduction has a nuanced impact:
Short-term negative: Fewer companies will produce standardised, ESRS-compliant sustainability reports, reducing the availability of comparable ESG data for investment due diligence and portfolio monitoring. The market for third-party ESG data providers may partially compensate, but data quality and comparability will decline relative to a full-scope CSRD world.
Medium-term neutral to positive: The Omnibus I reduction does not change the policy direction of EU sustainable finance — it adjusts the pace of mandatory disclosure expansion. The fundamental investment thesis for Article 9 products, CRCF-grade carbon removals, and EU Taxonomy-aligned strategies is unaffected. If anything, the reduction in mandatory CSRD scope creates a relative competitive advantage for investment vehicles that already provide high-quality, standardised sustainability reporting.
CSDDD Amendment: Supply Chain Due Diligence Reduced
Omnibus I also proposes significant amendments to the Corporate Sustainability Due Diligence Directive (CSDDD), reducing scope to companies with over 5,000 employees and limiting value chain due diligence obligations to Tier 1 suppliers only (rather than the full value chain as originally proposed). This reduces compliance costs for large companies but also reduces pressure on supply chain partners to demonstrate sustainability credentials — a mixed signal for nature-based investment strategies that rely on corporate demand for traceable, certified supply chains.
Omnibus I reduces the administrative burden of CSRD for smaller companies, but does not diminish the investment case for high-integrity ESG strategies. For institutional investors subject to SFDR, the disclosure obligations that matter most remain fully intact.