On March 20, 2025, the European Council expressed its support for the Omnibus Package, a set of regulatory amendments proposed by the European Commission on February 26, 2025. This package introduces significant changes to EU ESG legislation, particularly the Corporate Sustainability Reporting Directive (“CSRD”) and the Corporate Sustainability Due Diligence Directive (“CSDDD” or “CS3D”). Additionally, a draft Taxonomy Delegated Act (“Taxonomy”) has been put forward for public consultation. The overarching goal of these reforms is to balance the EU’s sustainability ambitions with enhanced competitiveness for businesses across the region. If adopted, the proposed measures are estimated to reduce administrative costs by approximately EUR 6.3 billion annually while mobilizing an additional EUR 50 billion in public and private investments.

Changes to the CSRD

The Omnibus Package introduces several modifications to the CSRD, aimed at making compliance more manageable for businesses, including, inter alia:

• Narrower Scope: The CSRD currently applies to large companies meeting two of three thresholds (€50M turnover, €25M balance sheet, 250 employees) and listed SMEs. The proposal narrows this to firms with over 1,000 employees and either €50M turnover or €25M balance sheet, excluding 80% of previously covered companies. For non-EU companies, the turnover threshold in the EU rises from €150M to €450M, with additional criteria for subsidiaries and branches, reducing the directive’s impact on them
• ‘Value Chain Cap’: For companies no longer within the CSRD’s scope, a voluntary reporting standard (“VSME”) will be introduced to limit the information required by larger entities within the value chain.
• Postponement of Reporting: Under the original schedule, the second wave of companies (the so-called “large companies”) was set to report for the 2025 financial year, followed by the third wave (Listed SMEs, small and non-complex credit institutions, and captive insurance undertakings) in 2026. However, the proposal delays the reporting obligations for these two waves by two years.

Changes to the CSDDD

The Corporate Sustainability Due Diligence Directive will also undergo significant amendments:

• Extended Preparation Time: The transposition deadline will be postponed by one year the transposition deadline (26 July 2027) and the first phase of the application of sustainability due diligence requirements, covering the largest companies (to 26 July 2028).
• Streamlined Due Diligence Obligations: Companies will no longer need to conduct systematic in-depth assessments of indirect business partners unless there is plausible evidence of adverse impacts.
• Limitations on SME Reporting Requests: Large companies will be restricted from requesting excessive ESG data from SMEs and small midcap business partners (i.e. companies with not more than 500 employees), aligning with CSRD voluntary sustainability reporting standards (VSME standard), thus reducing the trickle-down effect further.

Changes to the Taxonomy

The Taxonomy Regulation, in effect since January 1, 2022, applies to CSRD-covered companies. Some of the changes are as follows:

• Voluntary Reporting: Future CSRD companies are no longer required to report Taxonomy alignment but can choose to do so.
• Partial Alignment Recognition: Companies progressing toward sustainability can voluntarily disclose partial compliance, highlighting their efforts.

Potential impact on companies in Serbia

The Omnibus Package reduces ESG compliance burdens for EU businesses, with mixed effects on Serbia. Less stringent CSRD reporting lowers compliance costs for Serbian firms trading with the EU, enhancing competitiveness. However, Serbia’s EU integration goals may encourage voluntary ESG adoption, attracting investment but requiring a strategic choice between long-term sustainability and short-term savings.

We will continue to monitor these legislative changes closely and provide updates on their impact. For further information or legal assistance regarding how these regulatory changes may affect your business, please feel free to contact us as via e-mail: office@pricapartners.com.