EU Omnibus simplification package update – what's next in terms of timing and process for the Council and Parliament?

On 26 February 2025, the European Commission published its proposals for the amendment of the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CS3D), the EU Taxonomy and the Carbon Border Adjustment Mechanism (CBAM). Read more about the contents of these proposals in our briefing.

But what is next for the omnibus simplification proposals and how long until the proposals could take effect?

The EU decision-making making process requires agreement between the co-legislators: Commission (representing the EU’s overall interests), Parliament (MEPs representing EU citizens) and Council (Ministers representing EU governments).

When the Commission published its draft proposals for the omnibus simplification package in February, it asked co-legislators to treat them as a priority. Below we set out the key administrative decisions made so far and how this impacts timing.

In particular, we have focused on the timing for the two proposals being considered: (i) the “stop the clock” proposal which will postpone the application of CSRD for waves 2 and 3 for two years and will postpone application of the CS3D for one year, both until 2028; and (ii) the detail of the wider amendments to be made to CSRD, CS3D, the EU Taxonomy and CBAM.

Proposal 1: “Stop-the-clock”: postponing the application of CSRD and CS3D until 2028

Parliament: on Tuesday 1 April 2024, the Parliament voted in favour of using its urgent procedure under Rule 170 of the Rules of Procedure to fast-track the vote on the “stop-the-clock” proposal. The “stop-the-clock” proposal would delay the entry of application of CSRD requirements by two years for large companies which have not yet started reporting and listed SMEs and the transposition deadline and the first phase of CS3D application for the largest companies by one year.

Under the urgent procedure, there will be no committee voting, and so the Parliament’s final vote on the “stop-the-clock” proposal will take place on Thursday 3 April 2025, with the deadline to table any amendments being Wednesday 2 April 2025.

Council: Once approved by Parliament, the stop-the-clock proposals will only need formal Council approval to enter into force. The Council already agreed to support the proposal on 26 March 2025.

Following approval by the co-legislators, the first proposed Directive setting out the “stop-the-clock” proposal will be published in the Official Journal of the European Union. Under the current drafting of the first proposed Directive, the “stop-the-clock” postponements will come into effect on the day immediately following publication, which will then need to be transposed into local law by each Member State.

Proposal 2: substantive amendments to the legislation

Parliament: For the substantive amendments proposed to CSRD, CS3D, the EU Taxonomy and CBAM, a rapporteur has been appointed. His role will be to analyse the Commission’s proposed amendments outlined in the second proposed Directive and to lead the negotiations on these proposals within the Parliament (including consultations with businesses and other stakeholders).

Council: The Council has already begun to consider the wider amendments under the omnibus simplification package. The conclusions of the Council meeting on 20 March 2025 emphasised that the Council calls for regulatory and reporting burdens for businesses to be drastically reduced, as a matter of urgency and also urged that the omnibus simplification package be treated “as a matter of priority and with a high level of ambition, with a view to finalising them as soon as possible in 2025”.

While the co-legislators have sought to fast-track the “stop-the-clock” proposal as much as possible, we do anticipate that the substantive amendments will require further negotiation.

EFRAG instructed to simplify the ESRS

In the meantime, the Commission has instructed EFRAG to begin the process for simplifying the European Sustainability Reporting Standards (“ESRS”). As the ESRS have been implemented through the Commission’s delegated acts, these do not require the express approval of the EU Council or Parliament (although the co-legislators do have power to revoke the delegation or to express objections).

On 28 March 2025, EU financial services Commissioner Maria Luís Albuquerque sent a letter to EFRAG requesting that it begin the process of simplifying the ESRS “as soon as possible” and asking EFRAG to inform the Commission by 15 April 2025 about its internal timeline and work plan to deliver its advice.

In its Explanatory Memorandum to the Omnibus package, the Commission stated its plans to adopt amendments to the ESRS within 6 months after entry into force of the proposed Directives. The Commission also stated that these amendments should substantially reduce the number of mandatory ESRS datapoints by “(i) removing those deemed least important for general purpose sustainability reporting, (ii) prioritising quantitative datapoints over narrative text and (iii) further distinguishing between mandatory and voluntary datapoints, without undermining interoperability with global reporting standards and without prejudice to the materiality assessment of each undertaking.” The Commission have also suggested that the amendments to the ESRS should provide clarity, including clearer instructions on how to apply the CSRD’s double materiality principle.

In the letter on 28 March 2025, the Commission asked EFRAG to issue their technical advice by 31 October 2025 in order to “allow the Commission to adopt the corresponding delegated act in time for companies to apply the revised standards for reporting covering financial year 2027.” In response, the chair of the EFRAG Sustainability Reporting Board confirmed that it is “fully aligned” with the Commission’s simplification objective and that “by building on the experience of first wave companies, [EFRAG] will simplify the standards to support companies in delivering meaningful and decision-useful sustainability information while maintaining the ambition of the CSRD."

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This note is intended to be a general guide to the latest ESG developments. It does not constitute legal advice.

Authored by Rita Hunter, Emily Julier, and Julia Cripps.