Regulation & Public Policy

The Omnibus Confusion Aftermath:
What Companies Must Do Now

The best corporate strategy in the face of the EU's Omnibus proposal is not to wait and see but to adapt and lead. Here are five key things for companies to keep in mind amidst the chaos.

Brand Provided | By Jaime Santisteban | Published 1 month ago | About a 5 minute read

Image: Christian Lue

The European Commission’s Omnibus proposal has sent waves of uncertainty through corporate sustainability departments. While framed as a simplification, this proposed package significantly alters key sustainability regulations including CSRD, CSDDD and the EU Taxonomy. The revised scope and reporting delays might appear to ease the regulatory burden, but the reality is more complex. Companies that slow down their ESG efforts now risk falling behind.

Businesses that take a proactive approach, regardless of shifting regulations — maintaining strong data collection practices, and showing true commitment to positive impact — will strengthen their resilience and competitiveness in an increasingly complex, global economy. By embedding sustainability into their core strategy, they will also be better prepared to manage multifaceted risks and access value-creation opportunities via sustainable finance, such as green bonds and sustainability-linked loans.

Crucially, the pressure from diverse stakeholders for companies to take meaningful action, measure impact and disclose ESG performance is not only intensifying but is now essential to financial stability, business resilience and long-term competitiveness.

The risks of waiting

The Omnibus proposal has created a patchwork of new thresholds, extended deadlines and shifting expectations. The scope for mandatory reporting has narrowed, exempting many previously included companies. Additionally, reporting deadlines for certain firms have been postponed by two years. However, this doesn’t mean sustainability reporting is fading into the background. In fact, companies that scale back their efforts now could face costly consequences down the road.

Legislative processes in the EU are notoriously slow and unpredictable. While the Omnibus proposal is moving forward, its final adoption and national implementation could take years. Meanwhile, 18 member states have already transposed the existing CSRD into law, and enforcement is underway. Companies that assume they are off the hook risk scrambling later to meet evolving expectations. Moreover, investors, financial institutions and supply chain partners continue to demand transparency on ESG performance, regardless of regulatory changes.

Non-compliance with the CSRD is enforced at the national level, with each EU member state determining its own penalties. For instance, in France, violations can result in monetary fines, exclusion from public procurement, and even criminal penalties of up to five years in prison for obstructing audits. Germany imposes fines of up to €10 million, while some countries may penalize companies with fines reaching up to 5 percent of their annual revenue.

China’s reporting regulation signals a new trend

Interestingly, while Europe and the US are debating regulatory rollbacks and scaling back disclosure requirements, China is taking the opposite approach: The country has recently published its first corporate sustainability disclosure standards (CSDS), signaling a strong commitment to ESG transparency. These standards introduce sector-specific reporting requirements and a phased approach to mandatory disclosures for large companies. China's system focuses on a defined set of quantitative environmental and social metrics, aligning closely with international frameworks including ISSB and GRI. Additionally, China is integrating sustainability reporting with its existing financial reporting structures.

For companies operating or selling globally, the emergence of CSDS represents a shift in the ESG landscape worth their attention and therefore shows how adopting a culture of measurement and disclosure avoids future risks and promotes global competitiveness. As China solidifies its position as one of the world's largest buyers and markets, companies that get ready to report ESG performance will be better positioned to tap into this economic powerhouse. Compliance with CSDS will require enhanced data collection and verification, making sustainability reporting a key factor in regulatory approval and market access. Failure to adapt could lead to barriers to market entry, reduced attractiveness to investors and regulatory scrutiny. Additionally, supply chain transparency will become even more critical — as companies sourcing materials or manufacturing in China must ensure that their suppliers meet CSDS requirements, reinforcing ESG expectations across global supply networks.

Maintain momentum in data collection

One of the biggest mistakes companies can make is neglecting ESG data management in response to shifting regulations. Even if reporting obligations have been postponed, robust sustainability metrics remain critical for risk assessment, stakeholder communication and long-term strategy. Companies should continue refining their double materiality assessments, ensuring they capture both financial risks and social and environmental impacts. ESG software systems should be embraced over obsolete, spreadsheet-based methodologies and adapted to maintain structured, high-quality data and reporting.

Reassess assurance requirements and audit commitments

Omnibus introduces changes to assurance requirements, postponing mandatory shifts from limited to reasonable assurance. While this might seem like a reprieve, companies shall reassess their audit contracts and engage with auditors to determine what aspects of their ESG reports will remain critical. Avoid last-minute contract revisions by proactively aligning audit scope with evolving expectations. Additionally, ensure that sustainability reports maintain credibility, as investors and financial institutions will continue to scrutinize ESG claims.

Strengthen internal collaboration and market positioning

The fragmented implementation of Omnibus across EU member states means that regulatory scenarios will vary by jurisdiction. For maximum clarity, sustainability teams must work closely with external expert advisors and in-house legal and finance departments to ensure alignment across multiple regulatory environments. Simultaneously, businesses should leverage this moment to reinforce their market position. Transparency and consistency in reporting will remain essential for investor confidence and supply chain relationships.

Looking Ahead: ESG as a long-term competitive advantage

The Omnibus proposal is not a green light to roll back sustainability efforts. If anything, it’s a stress test for corporate ESG strategies. Companies that remain committed to robust sustainability practices will emerge stronger in the long run, while those that take a reactionary approach risk falling behind.

Ultimately, the best corporate strategy in the face of Omnibus is not to wait and see but to adapt and lead. By maintaining strong ESG data practices, ensuring cross-functional collaboration and staying ahead of regulatory shifts, companies will not only safeguard compliance but also strengthen their market position in an increasingly sustainability-driven economy.