Brussels, 3rd of March 2025 – As a component of the wider Competitiveness Compass initiative, the European Commission adopted a new package of proposals to simplify EU Rules, boost competitiveness, and unlock additional investment capacity.
It is expected to cut administrative costs by €6.3 billion and unlock €50 billion in public and private investment. This initiative aligns with the EU’s objectives of fostering a competitive and sustainable business environment, ensuring that companies—particularly SMEs—can focus on growth, innovation, and quality job creation.
Simplifying and Improving Sustainability Reporting
New reforms to CSRD and EU Taxonomy will reduce reporting complexity while maintaining transparency. 80% of companies will no longer fall under CSRD, focusing obligations on larger businesses. Reporting deadlines will be postponed until 2028, easing compliance burdens. EU Taxonomy reporting will be limited to the largest firms, though voluntary reporting remains available. Businesses can also report partially aligned activities to encourage gradual sustainability efforts. Key changes include a 70% reduction in reporting templates, a financial materiality threshold, and streamlined DNSH criteria for pollution prevention. Banks will also see adjustments in Green Asset Ratio (GAR) calculations to exclude smaller companies from their reports.
Easing Due Diligence Requirements
Due diligence rules will be simplified, particularly for SMEs. Companies will now focus on direct business partners rather than entire supply chains, and monitoring cycles will shift from annual to every five years, with additional checks only when necessary. SMEs will face fewer data-sharing demands, reducing trickle-down compliance burdens. The framework will also be more harmonised across the EU, and while civil liability conditions are removed, victims’ rights to full compensation remain protected. The largest companies now have until July 2028 to comply, with guidelines to be introduced by 2026.
A Simplified Carbon Border Adjustment Mechanism (CBAM)
SMEs and individual importers will be exempt from CBAM, eliminating compliance for 182,000 importers while still covering 99% of emissions through a 50-tonne annual threshold. For companies still within scope, reporting and emission calculations will be simplified, making compliance easier. Stronger anti-circumvention measures will also be introduced. These updates come ahead of a planned CBAM expansion in 2026, which will extend coverage to more sectors and downstream goods.
Boosting EU Investment Capacity
Reforms to InvestEU, EFSI, and legacy programmes will optimise existing funds, unlocking €50 billion in public and private investment for competitiveness, innovation, and sustainability. Member States will find it easier to contribute, and administrative requirements for SMEs, financial intermediaries, and implementing partners will be streamlined, generating €350 million in cost savings.
Next Steps
The legislative proposals will now go to the European Parliament and the Council for approval. Changes to CSRD, CSDDD, and CBAM will take effect once an agreement is reached and published in the EU Official Journal. The Commission urges priority treatment for the omnibus package, particularly the postponement of certain CSRD disclosure requirements and the CSDDD transposition deadline, to address stakeholder concerns.
The draft Delegated Act under the Taxonomy Regulation will be adopted after public feedback and will apply following the scrutiny period by the European Parliament and the Council.
Further Reading and Official Documents
For more details on the European Commission's first Omnibus packages, you can explore the following resources: