EU Law update: the “First Omnibus Package” – leniency or invitation for more stringent member state regulation?

Author: Stefan Schmierer, Managing Partner

This article provides an update on European Union Law concerning Corporate Sustainability and Governance (CSG), building on our previous update on the Corporate Sustainability Due Diligence Directive (CSDDD).

Key Directives and Their Criticisms: Administrative Burden and Extraterritorial Effect

The European Union (EU) has developed two main directives in recent years regarding CSG: the CSDDD and the Corporate Sustainability Reporting Directive (CSRD). These directives are considered the EU’s flagship initiatives for CSG. However, they have faced substantial criticism from the business sector both within and outside the EU due to their complexity and administrative burdens on businesses of all sizes. The directives’ extraterritorial effect has also been a point of contention. Initially, these directives were to be transposed into national law and become effective between 2025 and 2026, with parts of the CSRD already in effect for certain businesses.

EU Response to Criticism: The First Omnibus Package and Reduced Due Diligence

In response to criticism, EU member states and the EU Commission announced in November 2024 their intention to reduce administrative, regulatory, and reporting burdens. On February 26, 2025, the EU presented its proposal for the “First Omnibus Package”. While still subject to EU Parliament and Council approval, it is expected to become effective by December 31, 2025.

The Omnibus Package aims to reduce and adjust the scope, reporting requirements, and assurance obligations under the CSRD, and to narrow the due diligence measures of the CSDDD, improving consistency with other EU legislation.

CSRD Implementation Delayed and Scope Narrowed

The implementation of the CSRD will be delayed by two years, except for public interest companies already subject to the directive. The first reporting year originally scheduled for 2025 is now postponed to 2027, with reporting due in 2028.

The scope is also narrowed to companies with more than 1,000 employees and either net turnover exceeding EUR 50 million or a balance sheet total of EUR 25 million, excluding approximately 80% of companies previously subject to CSRD obligations.

CSDDD Deadline Extended and Supply Chain Monitoring Reduced

The deadline for transposing the CSDDD into national law will be postponed by one year from July 26, 2026, to July 26, 2027, with reporting beginning in 2028.

Due diligence obligations will be limited to a company’s own operations and those of direct business partners. Indirect partners are generally excluded unless specific conditions apply. Where direct partners are SMEs or small midcaps, information requests are limited to explicitly defined data, reducing administrative burden.

Changes to Remedies and Penalties under the CSDDD

The obligation to establish a harmonized EU‑wide civil liability regime will be abolished, leaving remedies to national law. Representative actions by trade unions and NGOs will also be abolished unless permitted under domestic legislation. The 5% net turnover penalty linkage will likewise be removed.

Implications of the Omnibus Package for Businesses

The Omnibus Package represents a meaningful reduction of regulatory burden. However, member states remain free to enact more stringent national laws, as evidenced by Germany. Businesses must continue to monitor and comply with stricter domestic requirements where applicable.

Additional resources from the EU Commission:

• Press release (26 February 2025)

• Q&A (PDF download)

• Accompanying working document by EU Commission staff (PDF download)

How Ravenscroft & Schmierer Can Help?

The EU First Omnibus Package alters key compliance expectations under the CSRD and CSDDD while preserving significant national law risks. Ravenscroft & Schmierer advises multinational businesses on EU sustainability regulation, cross‑border compliance strategy, and the interaction between EU directives and national law.

If you require guidance on how these developments may affect your operations or reporting obligations, contact us to discuss your circumstances and available options.

FAQ: EU First Omnibus Package

What is the EU First Omnibus Package?

It is a legislative proposal intended to reduce administrative and reporting burdens under EU sustainability laws.

Does the Omnibus Package abolish CSRD and CSDDD obligations?

No. It narrows scope and delays timelines but does not repeal the directives.

Can member states impose stricter national laws?

Yes. Member states may apply more stringent requirements than the EU minimum.

Which companies are excluded from CSRD under the Omnibus Package?

Companies with fewer than 1,000 employees are generally excluded.

How can Ravenscroft & Schmierer assist with EU sustainability compliance?

Ravenscroft & Schmierer advises on CSRD and CSDDD obligations, risk assessments, and compliance strategy across EU jurisdictions.

Does Ravenscroft & Schmierer advise on national law deviations from EU directives?

Yes. We assist clients in evaluating stricter national laws alongside EU‑level requirements.

Can Ravenscroft & Schmierer help assess reporting and due diligence exposure?

Yes. We advise on reporting timelines, scope thresholds, and enforcement risk.

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Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

For specific advice about your situation, please contact:

Stefan Schmierer 

Managing Partner

+852 2388 3899

sschmierer@rs-lawyers.com.hk