EU businesses could receive relief worth 6 billion euros

Borek Flóra

The EU Competitiveness Compass^[1], published in January, identified three key areas (innovation, decarbonisation, and security) and outlined five measures to enhance the competitiveness of the European Union. One such measure is simplification, with the European Commission aiming to reduce the administrative burden on large companies by 25% by 2029, and by 35% for small and medium-sized enterprises.

The recently published package of proposals, the so-called Omnibus^[2] package, supports simplification by formulating complex measures covering relevant legislative areas that could reduce administrative obligations and business expenses to an unprecedented extent.

Réka Szűcs

“If the Omnibus package of proposals is adopted in its currently published form, it will – according to conservative estimates – achieve annual administrative cost savings of EUR 6.3 billion and mobilise additional public and private investment resources worth EUR 50 billion. However, it is important that this amendment does not compromise the achievement of the EU climate goals.”

– summarized Réka Szűcs, Business Unit Manager of Sustainability and Climate Change Consulting at Deloitte Hungary.

The changes proposed in the Omnibus package simplify companies’ compliance with European Union regulations in five areas: the CSRD (Corporate Sustainability Reporting Directive), the CSDDD (Corporate Sustainability Due Diligence Directive), the Carbon Border Adjustment Mechanism (CBAM), the EU Taxonomy, and investment programmes such as InvestEU.

Key Proposed Changes

The Corporate Sustainability Reporting Directive (CSRD) would apply only to the largest companies, those with an average annual headcount above 1,000. For companies currently subject to the directive and expected to start reporting in 2026 or 2027, the reporting obligation would be postponed by two years. These companies would thus first report in 2028, based on their 2027 data.

Sector-specific standards will not be adopted, and a simplification of the first edition of the ESRS (European Sustainability Reporting Standards) is on the agenda.

The tasks related to limited assurance will be simplified by the Commission by 2026, and the requirement for reasonable assurance will be eliminated.

The implementation deadline of the Corporate Sustainability Due Diligence Directive (CSDDD) will be postponed to 2028.

Due diligence requirements will be more limited in scope, focusing primarily on the company’s own operations, subsidiaries, and direct business partners. The EU-wide civil liability system will be removed, and national legislation will apply instead. The extension of the directive to the downstream value chains of the financial sector will be abandoned, although it will still fall within the scope.

The EU Taxonomy will only be mandatory for the largest companies; other firms may report voluntarily. Simplified reporting templates will be introduced, significantly reducing data requirements. The method of calculating the Green Asset Ratio (GAR) for banks will be revised to ensure that a decrease in the number of companies under the CSRD does not automatically reduce GAR values.

“The biggest winners of the proposal are those companies that would no longer be subject to CSRD and/or mandatory Taxonomy reporting requirements. However, even the largest companies would benefit significantly from the introduction of simplified reporting and due diligence obligations.”

– summarized Flóra Borek, Senior Manager of Sustainability and Climate Change Consulting at Deloitte Hungary.

The measures proposed in the Omnibus package are, of course, not yet final. They must still be discussed and adopted by the Council of the European Union and the European Parliament. As a result, finalisation of the entire package could take 9–12 months. The most likely early decision would concern the modification of CSRD and CSDDD deadlines, potentially taking effect by the end of 2025, while other changes would enter into force 12 months after final approval.