Omnibus 2025: What Does the Proposal Mean for Small and Medium-Sized Enterprises?

The Omnibus package aims to simplify corporate sustainability rules, reduce the reporting burden, and ensure better enforcement of existing directives across EU member states. The proposal has sparked debate in the European Parliament, with supporters arguing it will enhance European competitiveness, while critics warn that easing disclosure requirements could weaken sustainability ambitions.

Key Changes Affecting SMEs

The Omnibus proposal introduces several changes to the existing EU laws governing corporate sustainability and reporting:

• Higher reporting thresholds under CSRD: The threshold for mandatory sustainability reporting under CSRD will be raised to companies with over 1,000 employees or an annual turnover of at least €50 million. This change means that approximately 80% fewer businesses—many of them SMEs—will be required to comply with corporate sustainability due diligence obligations.
• Extended adaptation period for listed SMEs: Listed SMEs will have until 2028 to fully comply with EU sustainability regulations, allowing them more time to prepare for new compliance requirements.
• Removal of sector-specific standards: The Omnibus regulation eliminates sector-specific standards, making compliance easier across different industries and reducing unnecessary complexity in economic activities.
• Protection for SMEs in the supply chain: The introduction of the “Value-chain cap” ensures that large companies cannot impose additional sustainability due diligence demands on their smaller suppliers beyond what is outlined in the Voluntary Sustainability Reporting Standard for SMEs (VSME). The proposal aligns with the Union Consumer Protection Rules, ensuring fair competition and transparency in sustainability claims, particularly under the Unfair Commercial Practices Directive and the Consumer Rights Directive.

The Role of VSME: A Voluntary Reporting Standard for SMEs

As part of the Omnibus regulation, the European Commission is promoting the VSME standard—a voluntary sustainability reporting framework designed to be less resource-intensive for smaller businesses. The standard allows SMEs to report sustainability information in a structured manner while avoiding the heavy regulatory burden of full CSRD compliance. SMEs that are not covered by CSRD can choose to follow the VSME standard, which is intended to balance financial metrics, sustainability impacts, and competitive advantage. The Omnibus package ensures that SMEs are not required to provide more data than what is specified under VSME, even if they work with larger CSRD-covered companies.

Compliance Strategy for SMEs

Even though many SMEs will be exempt from direct CSRD obligations, they will still be affected by EU member states' national laws and their relationships with large corporations. To stay competitive and compliant, SMEs should consider the following steps:

• Understand Compliance Requirements Familiarize yourself with the Corporate Sustainability Reporting Directive, the EU Taxonomy Regulation, and the Sustainability Due Diligence Directive. Identifying which financial metrics and sustainability impacts apply to your business is crucial for long-term planning.
• Assess Sustainability Data Needs Map out relevant economic activities, such as carbon footprint, resource usage, and social impact metrics. Align your internal disclosure requirements with VSME guidelines to ensure that you meet potential expectations from larger supply chain partners.
• Develop Internal Reporting Systems Create streamlined reporting mechanisms to track and document key sustainability data. This will reduce last-minute adjustments when EU regulations evolve.
• Engage with Large Companies Since larger corporations are required to report on their value chains, SMEs should proactively engage with their biggest clients to identify what sustainability due diligence data is expected. Remember, under the Omnibus regulation, large companies cannot request more than what is covered under VSME.
• Educate your staff Having a basic understanding of sustainability reporting within the organization makes it easier to adapt when the requirements are tightened. Investing in skills development is a big step towards securing the future.
• Stay Informed on Legislative Developments The EU legislative process is ongoing, with co-legislators still debating the final decisions on Omnibus regulations. Participating in public consultations and staying informed about legislative proposals can help SMEs prepare for future changes.

By taking these steps, SMEs can ensure that they are well prepared for future demands and at the same time strengthen their competitiveness in an increasingly sustainability-focused market.

Key Takeaways

The Omnibus proposal is a significant step toward a simplification revolution in corporate sustainability rules within the European Union. It reduces reporting burdens, eliminates sector-specific standards, and introduces a voluntary reporting framework (VSME) for SMEs. While this shift is expected to enhance European competitiveness, businesses should remain proactive in aligning with evolving EU sustainability regulations to maintain their competitive advantage. The ultimate impact of Omnibus 2025 remains to be seen, but one thing is clear: businesses that start preparing now will be best positioned for the next phase of sustainability compliance in the EU.

Sources:

• European Commission - Questions and answers on simplification omnibus I and II
• Grant Thornton - EU:s Omnibus­förslag gällande hållbarhets­rapportering
• EFRAG - Voluntary reporting standard for SMEs (VSME)