Carbon Border Adjustment Mechanism (CBAM)
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Omnibus, the new EU simplification reporting proposals
The long-awaited Omnibus Simplification Package was finally unveiled on February 26, 2025. Designed to simplify and harmonise the key EU environmental regulations CBAM, CSRD and the CSDDD. The primary aim is to ease administrative burdens and reduce compliance costs, particularly for SMEs, which typically have lower emission levels and more limited resources for compliance than larger corporations. The EU also hopes the proposals will enhance competitiveness on global markets.
The EU Carbon Border Adjustment Mechanism (CBAM) is a key policy aimed at preventing carbon leakage by imposing a carbon price on certain imports. The Omnibus package introduces key regulatory proposals to ease business compliance. One of the most significant changes is the proposed increase in the de minimis threshold from €150 per consignment to 50 tCO₂e per year, potentially reducing the number of declarants by 90%. Despite this, the EU Commission estimates that 99% of embedded emissions entering the EU market will still be reported under CBAM.
The proposal also extends the use of default values – such as emission factors – to provide greater reporting flexibility. However, these values would reflect higher emissions than actual data, encouraging companies to obtain more accurate information from suppliers. Additionally, changes to the purchase and retirement of CBAM certificates include a proposed extension of the certificate purchase requirement to February 2027 (from the originally planned 2026) and shifting the annual retirement deadline from May 31st to August 31st to better align with financial reporting.
CBAM is also expected to incentivize companies and non-EU countries to develop their own carbon pricing mechanisms. To support this, the Omnibus package includes plans to release default values for third-country carbon pricing.
The Corporate Sustainability Reporting Directive (CSRD) is narrowing its scope, reducing the number of companies required to report by 80%—from 49,000 to 9,000—while still covering 75% of total EU turnover. The new criteria apply only to large EU firms with over 1,000 employees and either €50 million in turnover or €25 million in assets, as well as certain third-country companies with significant EU revenue. Despite the reduced scope, many companies intend to report voluntarily, having already invested time and money into gathering and reporting data for their CSRD disclosures. In addition, the European Financial Reporting Advisory Group (EFRAG), which developed the European Sustainability Reporting Standards (ESRS) for the CSRD, has introduced the VSME—a voluntary framework for SMEs with simplified reporting standards, reducing the required data points from approximately 1,100 to just 50.
The Corporate Sustainability Due Diligence Directive (CSDDD) has been streamlined to reduce compliance burdens, particularly for SMEs. Companies would only be required collect data from direct suppliers (tier 1), unless “credible risks” exist further down the supply chain. Compliance deadlines have been delayed to July 2028, with implementation guidelines fast-tracked for July 2026. Large companies can request only essential sustainability data from SMEs, and contract terminations due to failed due diligence are now optional rather than mandatory. Stakeholder engagement is limited to workers and directly affected communities, while policy updates are now required every five years instead of annually.
While the Omnibus proposals have drawn valid criticism toward the EU Commission and its climate leadership goals, the EU remains a global climate leader, especially after withdrawal of the US from the Paris Agreement. It seeks to balance ambitious sustainability policies with economic competitiveness. Measures like CBAM, CSRD, and CSDDD incentivize emissions reductions, investment transparency, and supply chain due diligence. The Omnibus proposals aim to refine regulations to support both climate action and economic resilience, ensuring the EU remains at the forefront of sustainability leadership.
