Omnibus Proposal FAQ: Your Questions Answered

The European Commission's Omnibus Package introduces a pivotal shift in the Corporate Sustainability Reporting Directive (CSRD) framework. Aimed at simplifying reporting obligations and alleviating the compliance burden on companies, the proposal encompasses two primary components:

1. The “Stop-the-Clock” Directive introduces a temporary delay in reporting deadlines for many companies. Specifically, it postpones CSRD reporting requirements by two years for companies that have not yet begun their reporting, including large companies and listed SMEs. Additionally, it delays the transposition deadline and the initial phase of application for the Corporate Sustainability Due Diligence Directive (CSDDD) by one year.
   
2. The “Simplification” Proposed Directive introduces permanent adjustments to the CSRD scope and reporting requirements of the CSRD, CSDDD, and the EU Taxonomy. Notably, it raises the threshold for mandatory reporting, limiting the CSRD's applicability to companies with more than 1,000 employees and either a balance sheet total exceeding €25 million or a net turnover exceeding €50 million. In addition, the proposed directive seeks to reduce the amount of reported data, introducing a significant cut to the reporting requirements of the CSRD, CSDDD, and EU Taxonomy.

These initiatives are part of the broader 'Omnibus' Package, adopted by the Commission in February 2025, which aims to simplify EU legislation in the field of sustainability. The European Council and the European Parliament have prioritised these Proposals to provide EU companies with the necessary legal certainty regarding their reporting and due diligence obligations. 

The aim is to balance the EU’s sustainability ambitions with calls from the private sector to reduce administrative burden, particularly for smaller companies. But what does it actually change? Below are some of the most common questions answered.

1. Do all companies with fewer than 1,000 employees fall out of the CSRD scope?

Yes, if the Simplification Proposal is adopted. Companies would need to meet the >1,000 employees threshold and one of the financial thresholds (€25M balance sheet or €50M net turnover) to be in scope.

Note that the Simplification Proposal will need to go through the normal legislative process of the European Union. This entails the European Parliament examining the Commission proposal and submitting changes or adopting it, after which it goes to the Council, and the same process repeats. If the Council agrees with the text, the law is adopted; if not, they go on to the next version of the text. The earliest the European Parliament Committee on Legal Affairs will vote on the final text is October 13, 2025, with a plenary vote expected later in the month.

2. My company is listed and has fewer than 500 employees. Do we still need to report?

Not under the text proposed in the Omnibus Package. Listed undertakings with <1,000 employees would no longer be obliged to report under CSRD but could instead report using the Voluntary standards that EFRAG will develop that will be based on the VSME standard.

3. Is the 1,000-employee threshold only for Wave 1?

No, the new threshold would apply across the board. Companies below 1,000 employees would no longer be required to report under CSRD. However, it is worth noting that the “Stop-the-Clock” Directive delayed reporting for companies that had not begun reporting, so Wave 1 companies should continue to report until the “Simplification” proposal is adopted and the changes in thresholds render them out of scope. 

4. Can you please clarify if the number of employees shall be based on full-time equivalents or physical head count?

A recent FAQ published by the Commission addresses this question:‍

How is the average number of employees calculated for the purpose of the undertaking’s categorisation under the Accounting Directive?

Union legislation does not regulate the calculation of the average number of employees for the purpose of the undertaking’s categorisation under the Accounting Directive. However, Member States may have adopted national rules or provided guidance on this matter. In the absence of national rules or guidance, undertakings may use Article 5 of Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises as guidance regarding the measurement of staff headcount, as a proxy of an average number of employees: “[…]The headcount corresponds to the number of annual work units (AWU), i.e. the number of persons who worked full-time within the enterprise in question or on its behalf during the entire reference year under consideration. The work of persons who have not worked the full year, the work of those who have worked part-time, regardless of duration, and the work of seasonal workers are counted as fractions of AWU. 

The staff consists of: (a) employees; (b) persons working for the enterprise being subordinated to it and deemed to be employees under national law; (c) owner-managers; (d) partners engaging in a regular activity in the enterprise and benefiting from financial advantages from the enterprise. Apprentices or students engaged in vocational training with an apprenticeship or vocational training contract are not included as staff. The duration of maternity or parental leaves is not counted.”

We have over €50M turnover and €25M in assets, but only 14 employees. Are we exempt now?

If the simplification proposal is adopted, then yes. For now, your company remains in the scope of the CSRD. Despite the financials, your headcount (<1,000) would exempt you from mandatory CSRD reporting.

Will the VSME become mandatory for companies with 250–999 employees?

It is not expected, but the topic remains uncertain as little has surfaced on the document. As of the current proposal, these companies would no longer be required to report under the CSRD. However, they would be encouraged to use a new Voluntary Standard based on the VSME, especially when requested by value chain partners or financial institutions.

Market dynamics signal a clear shift: ESG reporting is no longer driven solely by regulatory compliance, but increasingly by market expectations and stakeholder demands. More and more organisations are viewing ESG disclosures as a strategic opportunity to better understand, evaluate, and improve their operations and value chains—rather than treating it as a mere compliance checkbox. This trend reinforces the relevance of voluntary ESG standards for smaller entities, as proactive transparency becomes a competitive differentiator and a trust-building tool within supply chains and capital markets.

Stay Ready, Keep Moving

While the Simplification Proposal isn’t law yet, its direction is clear: more proportionality, less burden. For companies that may fall out of scope, this is an opportunity to refocus efforts on voluntary, strategic ESG reporting. For those still in scope, it's a reminder to continue preparing with no-regret actions like double materiality assessments and gap analyses.

At Greenomy, we remain committed to helping businesses stay ahead of regulatory change, whether reporting is mandatory or voluntary. Stay tuned, stay prepared, and remember: transparency remains your most strategic sustainability asset. Ready to take the next step for your ESG Strategy? Get in touch today.