Are Leading CEOs Right to Oppose the EU's Omnibus Package?

The European Commission is revisiting its sustainability Omnibus package to strip out complexity and concentrate obligations on larger companies deemed to have a “bigger impact on the environment and climate.”

The package spans amendments to the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD/CS3D), plus a draft Taxonomy Delegated Act for consultation. Each of these moves is intended to make sustainability reporting more efficient.

For business leaders, the shift requires a sharper focus on proportionate compliance and the need for driving clarity on scope, timelines and enforcement. SMEs expected to see lighter touch requirements.

Discussing the impact of these changes, consulting firm EY says: "The main aim of the Simplification Omnibus Package is to ensure a clear, simple and harmonised regulatory framework for businesses and to realise a significant simplification in the fields of sustainability finance reporting, due diligence and taxonomy, in particular for SMEs and small mid-caps.

"The Simplification Omnibus Package reflects the commitment to reduce reporting burdens and enhance competitiveness in the EU, through amendment of the CSDR, CS3D and the EU Taxonomy Regulation."

Newly proposed due diligence rules will generally limit responsibility to a company’s own operations, subsidiaries and direct business partners, with indirect tiers excluded.

According to EY, the CS3D is set to be amended on "limiting the notion of (relevant) 'stakeholder' and further restricting the stage of the due diligence process that require stakeholder engagement," while effectiveness reviews would move from annual to every five years.

Penalties would be clarified without the 5% of global turnover floor, and elements of the EU-wide civil liability and representative action regime would be removed.

Celebrating the push to streamline, Ursula von der Leyen, President of the European Commission, says: "Simplification promised, simplification delivered!

"EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy. This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way."

EY highlights timing shifts as a major change to help companies adapt and "give companies more time to prepare by (i) deferring the first application deadline for the CS3D from July 2027 to July 2028 and (ii) advancing the deadline for the Commission to adopt general due diligence guidelines to July 2026."

CEO pushback tests the case for simplification

Despite the drive for greater simplification, opposition has mounted among some business leaders.

To date, 46 German and French CEO's have urged the abolition of the CS3D, writing to Emmanuel Macron, President of France and Friedrich Merz, Chancellor of Germany, to call for the full abolition.

The letter is dated 6 October 2025 after the Franco-German business leaders’ meeting in Évian and signed on behalf of all 46 by Patrick Pouyanné, CEO and Chairman of TotalEnergies and Roland Busch, President and CEO of Siemens.

It outlines a broader deregulatory agenda, calling for reframing competition policy to enable strategic mergers, a moratorium with substantial revision of digital rules such as the Data Act and the AI Act, and a freeze on new EU directives with simplification by 1 January 2027.

It also proposes a strengthened Savings and Investment Union by end-2026, including a “28th regime” for capital markets, pan-European savings products backed by ECB guarantees, and fewer barriers to cross-border investment.

Energy asks include delaying the reduction of free emissions allowances until CBAM proves effective and creating an Energy & Climate omnibus to embed “technology neutrality” and build “One European Grid.”

The move sits awkwardly with both firms’ UN Global Compact commitments.

Responding on LinkedIn, Teresa Ribera, Executive Vice-President for a Clean, Just and Competitive Transition, at the European Commission, writes: “I appreciate the commitment to a more competitive Europe,” and adds, “competitiveness cannot come at the expense of the environmental and social standards that define Europe’s democracies and remain the backbone of our shared prosperity. No one should be mistaken, we will not lower these standards because there is no competitiveness in a race to the bottom.”

On LinkedIn, Andreas Rasche, Professor of Business in Society and Associate Dean at Copenhagen Business School, writes: "46 German and French CEOs have written a letter to Friedrich Merz and Emmanuel Macron calling "for the full abolishment of CS3D as a clear and symbolic signal to European and international companies that the governments and the Commission are really engaged to restore competitiveness in Europe.

"This reads a bit like: 'We acknowledge that deregulation is underway, but it’s not enough. If you 'really' want to deliver, scrap it entirely'."

Next steps and timelines to watch

Once the official draft of the Simplification Omnibus Package is published, it must be approved by the European Parliament and the Council.

The timetable is unclear, though the European Commission has asked both institutions to "fast track" the file.

EY says: "The Commission has submitted two separate proposal directives," with one focusing on postponing certain CSRD disclosures and the CS3D transposition deadline to secure swift agreement on delays while enabling negotiation on more fundamental reforms.

EY adds that Member States that have already transposed the CSRD and CS3D will need to amend their implementations within 12 months after the text comes into force, noting Belgium has already transposed the original CSRD into national law, while the CS3D has not yet been transposed into Belgian law.