In my recent post discussing Trump administration changes affecting the world of D&O, I noted recent developments suggesting that the SEC seems poised to either withdraw or non-enforce the agency’s Climate Change Disclosure Guidelines, which, as discussed here, were finalized in March 2024. However, as I also noted, even if the guidelines are withdrawn, many U.S. companies could still remain subject to ESG reporting requirements under the EU’s Corporate Sustainability Reporting Directive (CSRD).

Now, apparently reflecting a desire among EU member states for their economies to be more competitive in the global business environment, the European Commission has proposed an “Omnibus package” of proposed revisions to streamline a number of EU laws, including the CSRD. As discussed below, the proposed revisions could significantly reduce the number of U.S. companies, and the number of companies overall, obliged to report under the CSRD.

A copy of the European Commission’s February 26, 2025, press release about the proposed “Omnibus package” can be found here. The Commission’s Q&A about the proposed revisions can be found here. The full Commission proposal (which is in two parts) can be found here and here. A February 26, 2025 memo from the Cooley law firm entitled “Impacts for U.S. Companies of the Proposed EU Omnibus Package” can be found here.

Background Regarding the CSRD

The EU adopted Corporate Sustainability Reporting Directive is 2023, requiring EU companies and non-EU companies with specified levels of EU activity to file annual sustainability reports along with their financial statements. In July 2023, the European Commission adopted, pursuant to the CSRD, its first set of European Sustainability Reporting Standards (ESRS), as discussed here.

The reporting standards under the ESRS are quite extensive, and substantially broader than the reporting requirements under the SEC’s Climate Change Disclosure Guidelines. Among other things, the ESRS guidelines, unlike the SEC guidelines, require Scope 3 carbon emissions disclosures. The ESRS also applies to a broad range of topics beyond just climate change, including marine and water resources; biodiversity and ecosystems; and “circular economy” [resource inflows and outflows toward a sustainable “circular economy”]; Social (own workforce; workers in the value chain; affected communities; and consumers and end-users); and Governance (business conduct).

Context for the Proposed Revisions

As a result of changing circumstances in the global business environment, as also as a result of continuing challenges in certain European domestic economies (e.g., Germany), a new European consensus with respect to the EU regulatory environment has emerged. As I noted in a recent post (here), at the February 2024 AI Action Summit, held in Paris, a number of European leaders expressed the view that the EU’s active regulatory approach could be making European countries less competitive, and suggested that the EU perhaps should dial back its regulatory efforts.

Summary of the Proposed Revisions

The European Commission, perhaps in response to the kinds of sentiments expressed at the recent conference, apparently has acted on this changing perspective on regulation.

As announced on February 25, 2025, the Commission has, according to its press release, “adopted a new package of proposals to simplify EU rules, boost competitiveness, and unlock additional investment capacity” in order to foster “a more favourable business environment to help EU companies grow, innovate, and create quality jobs.” The proposed changes are also expressly designed to be less burdensome on companies, particularly small and medium-sized companies.

The Commission has introduced these proposed changes in two different “Omnibus packages,” perhaps so denominated because the proposals seek to revise multiple different EU laws, including the CSRD. It is important to note that the Omnibus packages are merely legislative proposals that could change before being adopted, as a result of consideration of the proposals by the European Parliament and the European Council.

The Omnibus packages propose a host of changes, but for purposes of this blog post, the most important change is that the proposal would introduce new reporting thresholds that would take many companies out of the CSRD reporting requirements.

The revised thresholds would, as summarized in the Commission’s press release, “remove around 80% of companies from the scope of CSRD, focusing the sustainability reporting obligations on the largest companies which are more likely to have the biggest impacts on people and the environment” and “ensure that sustainability reporting requirements on large companies do not burden smaller companies in their value chains.” The proposals would also postpone until 2028 the reporting obligations for the companies to whom the reporting requirements do apply.

Within the new proposed thresholds, only non-EU parent companies with EU turnover of over €450 million and with a one large EU subsidiary (size defined by EU turnover and employees) or a branch that generated EU turnover of €50 million. For EU companies, the proposed revisions would substantially increase the reporting thresholds according to number of employees and EU turnover, as well.

The proposed revisions would also limit reporting requirements of smaller companies in a larger company’s value chain. Under the new provisions, companies required to report should not seek to obtain information from those in their value chain that are not themselves in scope of the CSRD, beyond the information specified in new ‘voluntary’ standards (to be adopted by the Commission).

As detailed in the law firm memo to which I linked above, the Omnibus packages also proposed a host of other substantial revisions to the CSRD, as well as to a variety of other EU laws, including the Corporate Sustainability Due Diligence Directive (CSDDD), which, as discussed here, in a separate law that introduced comprehensive human rights and environmental due diligence obligations. According to the Commission’s press release, the proposed changes to the CSDDD are intended to “simplify sustainability due diligence requirements so that companies in scope avoid unnecessary complexities and costs” and reduce burdens on small and medium sized companies. The revised CSDDD would only apply to the largest enterprises.

Conclusion

The proposed Omnibus packages will now move forward pursuant to applicable legislative processes. Even if agreed and adopted, the proposed changes would also still need to be incorporated into member states’ own laws. The ultimate outcome of the proposed changes is for now uncertain; however, for now, the likelihood is that fewer companies – and in particular, fewer U.S. companies – will be subject to the EU disclosure and due diligence guidelines, and even those subject to the requirements will be obliged to comply on a more extended timeline.