Navigating the EU’s Omnibus proposals – what they mean for sustainability data

The European Commission has unveiled sweeping reforms to key elements of its sustainable finance agenda with the goal of streamlining EU requirements and increasing European competitiveness. The Commission’s Omnibus package proposes to significantly reduce the number of companies captured by disclosure rules and seeks to simplify technical requirements around this disclosure.

While there was wide support for the reduction in reporting and the proposals’ focus on more material data, the Omnibus package’s exemptions will also reduce the availability and comprehensiveness of corporate sustainability information available for investors.

We have been following the developments, and we are working closely with regulators and other stakeholders to ensure financial professionals have the data they need to better manage their risks and meet regulatory reporting obligations. We have recently set out suggestions for reform, and are convening industry discussion. Below, we consider what the proposals mean for investors and issuers, and how LSEG can help them navigate the uncertainty linked by those changes.

In recent years, the EU’s sustainable finance strategy has introduced several initiatives to help direct capital towards the bloc’s environmental goals. These include the EU Taxonomy, which defines which economic activities are deemed sustainable, the Corporate Sustainability Reporting Directive (CSRD), which requires companies to report on their environmental and social impacts, and the Corporate Sustainability Due Diligence Directive (CSRDDD), which requires them to address environmental and human rights impacts in their supply chains. 

However, concerns have grown around the costs imposed by these regulations and potential impacts on competitiveness. In response, the European Commission initiated work in late 2024 on a package of measures designed to deliver a “simplification revolution”, including a goal of reducing reporting requirements by 25%, and by 35% for SMEs by 2029.

Proposed on 26 February, the Commission’s Omnibus package includes mainly three proposals:

• A directive to amend the CSRD and the CSDDD, including by reducing the number of companies required to disclose under the CSRD  removes around 80% of companies, and exempting many smaller companies from the CSDDD.
• Postponing by two years CSRD reporting for companies due to begin reporting in 2026 and 2027, and the transposition deadline of the CSDDD by one year, to 2028.
• An act to amend technical elements of EU Taxonomy reporting requirements, reducing the reporting template by 70% and introducing a materiality assessment to make disclosure voluntary for companies with less than 10% eligible activities.

The Commission estimates that its proposals will deliver more than €6 billion of “administrative relief’.

According to LSEG analysis, about 14,000 publicly listed companies (EU and non-EU) would have had to report under the current CSRD thresholds. The European Commission's proposals to raise the threshold to 1,000 employees would lead to reduce the number of companies in scope of the CSRD:

• The number of public companies in scope would fall by 57%, to approximately 6,000 companies.  This includes 30% of EU-listed companies, 25% companies listed in the United States, and 12% in Japan.
• The number of private companies in scope would drop by 73% from around 20,000 companies to 5,500. This includes EU and non-EU companies.

Among investors, there is strong demand for data to enable them to integrate sustainability considerations, especially those related to climate and the energy transition, into investment strategies; our latest survey of asset owners finds that more than 80% of asset owners are doing so.

It is important to acknowledge that, even with the Commission’s plans to simplify the European Sustainability Reporting Standards (ESRS), the EU’s sustainable finance package will still result in a considerable amount of detailed and granular reporting on corporate sustainability issues. This will allow investors to have greater visibility on sustainability factors, and enable them to better measure and manage risks across their portfolios and develop new and differentiated investment strategies.

The Commission’s proposals also retain consistency between the CSRD and other elements of the sustainable finance architecture, such as the Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy. It ensures that the key performance indicators that investors need to meet their reporting requirements under the SFDR and the EU Taxonomy will be made available.

The Commission’s proposals also retain a number of key aspects that will support investors:

• Consistency between the CSRD and other elements of the sustainable finance architecture, such as the Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy. It ensures that the key performance indicators that investors need to meet their reporting requirements under the SFDR and the EU Taxonomy will be made available. 
• A high level of interoperability between the EU regulatory framework and those emerging globally, especially that of the International Sustainability Standards Board (ISSB). Sector-specific standards guide companies in their reporting and enable investors to compare companies within the same sector. While the Commission proposes to abandon them, there is an opportunity to either develop simplified standards aligned with ISSB sectoral standards or reference ISSB standards.
• The requirement that companies report using XBRL, a global standard that enables digital reporting. This is critical to ensure compatibility of EU data with systems across the financial sector.

The amendment of sustainability reporting standards, combined with the delay of the CSRD, also creates an opportunity to enhance alignment on transition plans. This additional time allows for better integration with the ISSB’s work, ensuring a more coherent and consistent approach.

However, some investors are concerned the Commission’s proposals will reduce the comprehensiveness of sustainability data available to investors and potentially encourage investment in those companies that still report:

• The CSRD had been welcomed by investors because it promised to bring uniformity to sustainability data provision across a wide universe of companies either based in the EU, or which do significant business in the bloc. This would have addressed long-running issues around data availability, consistency and comparability.
• The CSDDD would also help companies with large numbers of suppliers to source the information they need from all the businesses in their supply chain

The effect of the proposals are not insurmountable. Even under the Commission’s proposals, the CSRD and CSDDD will increase sustainability data availability and consistency. Over recent years, investor demand for sustainability data has run ahead of the provision by companies and other issuers. Data providers have responded by using proxies and estimated data. However, data providers – and their investor clients – will face higher costs in creating comprehensive associated datasets, and accept the risks associated with using proxied data, provided the reduced availability of reported data.

At LSEG, we are working to ensure that our sustainable finance data and analytics solutions are prepared to adapt to changes suggested by the EU Omnibus proposal. For example, we regularly update and assure quality within our sustainable finance datasets to align with evolving regulations, endeavouring to ensure clients receive compliant and reliable data.

We are also supporting clients in interpreting and applying sustainability data effectively. We work to make sure that any necessary data updates or changes in reporting formats are smoothly integrated into client workflows and communicated appropriately. We are also investing in technology and AI-driven analytics to anticipate regulatory shifts to ensure our clients can proactively adapt to evolving requirements. 

The Commission’s proposals will now go for consideration by the European Parliament and the Council of the European Union and thus subject to changes during these negotiations.

As with all sustainable finance regulation, our dedicated team is tracking how the evolution of the Omnibus is likely to impact our clients, whether as issuers or investors. We are working to help them understand these changes to the EU’s sustainability disclosure landscape and ensure that they can continue to access the information they need to assess sustainability risk and opportunity.