The global regulatory landscape for corporate climate programs is shifting rapidly. With the recent introduction of the Omnibus Proposal in the EU, key changes are being proposed to the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), and the Carbon Border Adjustment Mechanism (CBAM). These adjustments are set to impact corporate climate disclosures, reporting requirements, and compliance strategies for companies operating within and beyond the European Union.
In a recent webinar, Tim Weiss (CEO and Co-Founder) and Andy Cummings (VP of Client Services) unpacked these and other regulatory updates, their strategic implications, and how businesses should respond.
Prefer to watch the video? Access the webinar recording.
Key takeaways from the Omnibus Proposal
Why was it introduced?
The primary goal of the Omnibus Proposal is to streamline and simplify corporate sustainability reporting requirements, addressing feedback from businesses that found the original CSRD, CSDDD, and CBAM regulations overly complex and burdensome.
While the EU initially aimed for a 25% reduction in the reporting burden, the actual impact is far greater, with an estimated 80% reduction in the number of companies required to report under CSRD. The rationale behind this adjustment is to focus reporting obligations on the largest and most influential corporations, allowing them to set the standard for sustainability while reducing compliance stress on smaller organizations.
Key updates to CSRD
The Corporate Sustainability Reporting Directive (CSRD) remains a crucial framework for corporate sustainability disclosures. However, the Omnibus Proposal introduces key changes:
- Higher employee threshold: EU companies now need 1,000+ employees (up from 250) to be required to report.
- Higher revenue threshold: For non-EU parent companies, the required EU net turnover threshold increased from €150M to €450M.
- Delayed implementation for some companies: For companies not considered Public Interest Entities, the timeline for reporting obligations has been extended by two years, giving companies more time to prepare.
Who should continue reporting into CSRD?
- Public Interest Entities: Companies already reporting under CSRD in 2025 have no change to scope nor timeline.
- Large EU Undertakings (1,000+ employees): Even if the timeline shifts, these companies should continue preparing for CSRD compliance and may be subject to existing member state laws while the proposal makes its way through the Council and Parliament.
- Companies in the “grey zone” (750-999 employees, €300M+ revenue): While they might no longer be required to report under the new thresholds, they should monitor legislative developments closely, as it’s possible the exact thresholds change again in the coming months.
- Smaller companies (well under 1,000 employees, €450M revenue): Likely exempt from CSRD moving forward, but may still need to provide sustainability data to larger business partners.
One critical aspect that remains unchanged is the Double Materiality Assessment (DMA), meaning companies must continue assessing both their impact on climate and how climate risks affect their business.
Key updates to CSDDD
The Corporate Sustainability Due Diligence Directive (CSDDD), aimed at holding companies accountable for human rights and environmental impacts in their value chains, remains largely intact, with a few notable highlights:
- Stronger focus on direct (tier 1) suppliers: While companies still need to map their supply chains and assess indirect supplier risks, there is less emphasis on proactively collecting data from indirect suppliers.
- Delayed implementation & adjusted reporting frequency: The first reports are now due one year later, and subsequent reports will be required every five years instead of annually.
- Mandatory climate transition plans: Companies still must demonstrate annual progress toward climate goals, rather than just setting long-term targets.
A major point of contention in the CSDDD debate is the liability and penalties framework, which will vary by EU member state rather than following a single EU-wide standard.
Key updates to CBAM
The Carbon Border Adjustment Mechanism (CBAM) is designed to prevent carbon leakage by placing a tax on high-carbon imports (e.g., steel, aluminum, cement, fertilizers). The Omnibus Proposal makes CBAM reporting less burdensome by:
- Raising the reporting threshold: Importers with under 50 metric tons of emissions annually are exempt.
- Extending the reporting deadline: Companies now have until late August (instead of Q1) to submit reports.
- Simplifying calculation methods: Companies will have an easier time measuring and reporting emissions from imported goods.
Despite these changes, CBAM is still expected to expand over time to cover additional industries.
Global regulations and motivations remain strong and growing
The U.S. response: California & other states implement their own rules
While the EU is relaxing some reporting obligations, and the U.S. federal government is unlikely to move toward any centralized regulations during the current administration, U.S. states are stepping in to press forward. California’s SB 253 & SB 261 laws, requiring large corporations to disclose emissions and climate-related financial risks, take effect in 2026 and will impact both U.S. and international companies operating in the state.
Other states—including New York, Illinois, and New Jersey—are considering similar climate disclosure laws, which could create a patchwork of regulations across the U.S, using California’s laws as a template.
Global trends: Climate disclosure is becoming the norm
Beyond the U.S. and E.U., regulations mandating climate disclosure are growing across the world. Over 74% of global GDP is covered by some form of climate disclosure legislation, and corporate climate strategies are now essential for long-term competitiveness.
Market pressures are driving climate action
While regulatory changes dominate the headlines, companies are still facing pressure from investors, customers, and employees to advance their climate strategies. The transition to a low-carbon economy is accelerating, with:
- 90% of new U.S. electricity capacity in 2023 coming from renewable energy.
- 77% of institutional investors prioritizing investments in the energy transition.
- Large buyers pressuring suppliers for emissions data, even if they are not legally required to disclose.
What should companies do next?
- In some cases, stay the course: Most companies already preparing for CSRD, CSDDD, and CBAM should continue, as future adjustments may still expand reporting requirements again.
- Focus on market pressures, not just regulations: Investor expectations, customer demands, and operational efficiencies make climate strategy a business imperative, not just a compliance issue.
- Strengthen internal data collection: Even if reporting timelines shift, having accurate emissions data will remain critical for compliance, reputation, and competitive advantage.
- Engage value chain partners: Even exempt businesses may be asked to provide climate data to larger partners subject to regulations.
The Omnibus Proposal represents a shift toward simpler, more manageable climate reporting while still ensuring that large, high-impact businesses drive corporate climate action. However, with additional global regulations expanding and market-driven sustainability expectations rising, companies cannot afford to slow down.
Instead, organizations should view sustainability as a core business strategy—one that enhances resilience, mitigates risk, and creates long-term value in an economy rapidly transitioning to low-carbon operations.
For businesses looking to navigate these evolving regulations and craft a strong corporate climate strategy, staying informed and proactive is the key to long-term success.
Looking to better understand your emissions footprint and reduction opportunities? Reach out for a no-obligation consultation with the Optera team.
