Omnibus: comments from 14 Member States on simplification and safeguarding ESG objectives

While the current European negotiations on the Omnibus Package are ongoing, 14 EU Member States , including Germany, Estonia, Finland, Luxembourg and Italy, have submitted detailed comments to guide the revision of the European Sustainability Reporting Directive (CSRD) and the European Due Diligence Directive (CSDDD). The Commission's proposal aims to simplify certain regulatory requirements and reduce administrative burdens, in particular for small and medium-sized enterprises, while maintaining coherence with the objectives of the Green Deal.

The working document highlights widespread support for the principle of simplification , but also the need to ensure that such simplification does not undermine the credibility and effectiveness of the sustainable transition. Many countries, including Germany and Estonia, stress the need to ensure that the bureaucracy associated with sustainability does not hinder the competitiveness of European businesses . Hence the shared proposal to make certain due diligence requirements voluntary and to increase flexibility in data collection along value chains.

One of the most debated issues is the adjustment of the size thresholds that determine the applicability of the CSRD. The Commission proposal provides for an exemption for companies with fewer than 1,000 employees and a turnover of less than 450 million euros. Germany and the Czech Republic propose a strict application of both thresholds in parallel, but Italy puts forward a distinct and more flexible position, proposing to lower the threshold to 500 employees for certain obligations and to distinguish between companies subject to full reporting and companies that could adopt simplified standards. This proposal is consistent with the principle of proportionality, which allows for differentiating obligations based on the actual capacity of companies to comply.

Another critical aspect raised concerns the quality and quantity of the information required : many delegations question the actual usefulness of the amount of data to be collected and communicated, often without a clear added value in terms of transparency or environmental/social impact. The rigidity of the professional requirements for auditors is also the subject of criticism , in particular by Luxembourg and also supported by Italy, which calls for greater flexibility in the rules applicable to control bodies. Finland, for its part, underlines the need for clearer guidelines from the Commission, which help financial operators to disentangle themselves from the regulatory overlaps between finance and sustainability.

Another key aspect is the extension of reporting along the value chain . Several Member States, including Italy, propose that companies should not be obliged to collect data from suppliers with fewer than 1,000 employees, unless there is a voluntary agreement. This approach aims to protect smaller supply chain partners, who often lack the resources to comply with complex reporting obligations, and at the same time avoid distortions in commercial relationships between large companies and SMEs.

Another theme shared by several States is the attention to the delicate balance between transparency and confidentiality . Several delegations, including Germany and Italy, underline the need for disclosure obligations not to require companies to disclose protected information, such as know-how, patents or results of innovation. In line with the principle established by EU Directive 2016/943 on trade secrets, it is reiterated that sustainability reporting cannot become a competitive risk factor for European companies, especially in high-tech sectors.

With regard to SMEs, there is broad convergence on the need for targeted exemptions for small listed companies , believing that listing on the stock exchange alone is not in itself an indicator of operational capacity that justifies such significant administrative burdens.

Finally, Italy, while supporting the Commission's intention to simplify the ESRS through a delegated act that eliminates the less relevant data points, gives greater value to quantitative indicators and clarifies the application of the materiality principle, also underlines the need to adopt a gradual approach to their implementation. This is to allow companies, especially SMEs, to gradually adapt to the new requirements, avoiding excessively abrupt operational impacts. In this perspective, Italy highlights the importance of supporting the legislation with concrete technical and financial support tools, which are essential to facilitate an adequate transition towards sustainability standards.

In short, the comments that emerged outline a common front for a reasoned simplification, which does not compromise the climate and social ambition of the Union. The real challenge will be to find a balance between regulatory rigor and administrative sustainability, ensuring that the green transition is inclusive, feasible and competitive.