What’s the Omnibus Proposal? And Why Should You Care?

Europe might be about to pull off the biggest sustainability reporting rollback since it introduced the CSRD. Welcome to the Omnibus proposal.

The European Commission dropped the so-called “Omnibus Proposal” in February 2025. Behind the bureaucratic name is a surprisingly sharp move: cut the number of companies required to report under CSRD—by a lot.

We’re talking tens of thousands of companies across the EU that would suddenly be off the hook. And for investors trying to compare sustainability performance across markets? This just made it harder.

TL;DR: What’s Being Proposed?

The EU’s Omnibus proposal aims to “simplify” EU corporate reporting rules—by raising the CSRD threshold to companies with more than 1,000 employees.

Before (CSRD original scope)	After (if Omnibus passes)
~50,000 companies in scope	~15,000 companies in scope
250+ employees = must report	1,000+ employees = must report

According to Commission estimates, this could remove 35,000 companies from mandatory CSRD disclosures—a roughly 70% reduction.

Why It Matters

For companies, less reporting means fewer costs and compliance tasks.

But for those analyzing CSRD disclosures—investors, financial analysts, or ESG-focused allocators—this change narrows the field of transparency. With fewer companies required to publish standardized sustainability reports, evaluating ESG risk, opportunity, and performance gets harder. Gaps will widen between larger, covered firms and smaller, exempt ones.

It’s also a shift in direction. The CSRD aimed to make ESG data more complete and comparable across Europe. This proposal would reverse part of that progress.

What’s Actually Changing?

1. The threshold jumps to 1,000 employees

The CSRD currently applies to large companies with 250+ employees. Omnibus wants to raise that to 1,000 employees—aligning it with the Corporate Sustainability Due Diligence Directive (CSDDD). That excludes most mid-sized firms.

2. Simplified standards for those still in

Remaining in-scope companies may use simplified ESRS. This includes easier templates, less granular disclosures, and potential phase-ins for smaller groups.

3. No taxonomy alignment for smaller firms

If you’re under 1,000 employees, no need to report alignment with the EU Taxonomy. That makes it harder to determine whether a company’s revenue or capex aligns with sustainable classifications.

Case Study: What Would Happen in Germany, France, and Italy?

Let’s break this down using public companies listed on major European indices as a snapshot.

Germany

Index	# of Companies	Typical Size	Estimated Affected
DAX	40	Large, >1,000 employees	0
MDAX	50	Mid-to-large	Few (est. 5–10%)
SDAX	70	Smaller firms	Likely 60% exempt

Total German listed companies (DAX/MDAX/SDAX): 160
Estimated number no longer in scope under Omnibus: ~42
That’s over 25% of listed German public companies potentially disappearing from mandatory CSRD disclosures.

France

Index	# of Companies	Typical Size	Estimated Affected
CAC 40	40	Large, global firms	0
CAC Next 20	20	Large to mid-cap	Few (est. 10–15%)

Many smaller listed companies in France (outside CAC indices) could fall below the 1,000 employee threshold, especially in tech, services, or green industries.
Result: Broader ESG visibility will shrink outside the top 40–60 firms.

Italy

Index	# of Companies	Typical Size	Estimated Affected
FTSE MIB	40	Large corporates	0–1 max
FTSE Mid Cap	60	Mixed mid-to-large caps	Est. 30–40% exempt

Italy’s mid-cap space includes many regionally significant companies with between 250–800 employees.
Under Omnibus, a significant portion of this group would no longer be legally required to publish CSRD-compliant sustainability reports.

Across all three markets, the story is the same: investors lose visibility into a key segment of Europe’s economy — mid-sized public firms that are small enough to fall through the cracks, but large enough to pose sustainability and financial risk.

Why the Commission Is Doing This

The stated goal: cut red tape for companies and reduce costs where ESG reporting may have less material impact.

“We want to reduce unnecessary red tape. Reporting should focus where it’s most impactful.”
— European Commission press release, Feb 2025

There’s also recognition that smaller firms may lack resources to implement full CSRD requirements in time for 2026.

What This Means for Investors

If you’re investing in mid- or small-cap European firms, this is a step backward.

With fewer mandatory disclosures, identifying climate risk, diversity gaps, or environmental impact across your portfolio will require more effort. You may have to rely on unverified voluntary data—or nothing at all.

The information gap will grow. And with it, so will the difficulty of differentiating real sustainability progress from vague promises.

We’ll Keep You Updated

This is a developing story, and the Omnibus proposal still needs to go through:

The European Parliament
The Council of the EU

We’ll update this article as major events unfold—new votes, amendments, or final approval.

Sources:

European Commission press release – Feb 2025

Staff Working Document on Omnibus Package

DRSC x Deloitte Report on ESRS Practice (2024)

This article was created with the assistance of AI and carefully reviewed, edited, and refined to ensure accuracy and clarity.