CBAM and Corporate Sustainability Reporting: The European Commission’s New Proposal
The European Commission has put forward a new legislative package aimed at simplifying EU regulations, enhancing competitiveness, and reducing the administrative burden on businesses. This package, known as the ‘Omnibus’ proposal, includes significant updates to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Carbon Border Adjustment Mechanism (CBAM). The proposal aligns with the European Green Deal while ensuring that EU businesses remain competitive in a rapidly evolving global market.
Omnibus Package and CBAM Reforms
On February 26, 2025, the Commission introduced the Omnibus package, covering sustainability reporting, corporate due diligence, and financial reporting. The reforms aim to streamline regulatory requirements, especially for small and medium-sized enterprises (SMEs), reducing reporting obligations by 25% by mid-2025.
Among the proposed changes, CBAM is set to undergo simplifications to make compliance easier while strengthening anti-abuse measures. The new proposal introduces a CBAM ‘de minimis’ threshold of 50 tonnes, exempting small importers that bring in minimal quantities of CBAM goods. This measure will keep approximately 99% of emissions within CBAM’s scope while reducing compliance costs for around 90% of importers.
For companies still subject to CBAM regulations, the proposal aims to simplify the authorization process for declarants, the calculation of embedded emissions, and the management of financial liabilities associated with CBAM compliance.
Changes to Corporate Sustainability Reporting (CSRD)
The CSRD, which mandates companies to disclose their sustainability impacts, is also undergoing modifications. The Commission proposes delaying the reporting obligations for certain companies to ease the transition. Specifically, the second wave of large companies (those with over 250 employees but fewer than 500) will have their reporting requirements postponed to 2027, while SMEs listed on EU-regulated markets will begin reporting in 2028 instead of 2026.
Additionally, the Commission will adopt a revised set of European Sustainability Reporting Standards (ESRS) to further simplify compliance and reduce the administrative burden. The proposed amendments will eliminate sector-specific reporting requirements and maintain a limited assurance approach, ensuring that reporting costs remain manageable for companies.
Revisions to Corporate Sustainability Due Diligence (CSDDD)
The CSDDD, which requires companies to assess and mitigate environmental and human rights risks across their supply chains, is also being modified. The transposition deadline for Member States has been extended by one year to July 2027, and the first group of companies required to comply with due diligence obligations will now have until July 2028 instead of 2027.
These changes are intended to provide businesses with additional time to implement compliance frameworks and to allow Member States to align national regulations with the EU-wide directive.
Next Steps
The proposed legislative changes will undergo further discussions among EU institutions before final adoption. The Commission is expected to conduct a full review of CBAM and sustainability reporting frameworks later in 2025 to evaluate potential extensions, including the integration of indirect emissions and additional sectors under CBAM.
A new legislative proposal is anticipated in early 2026, ensuring that sustainability regulations continue to support both environmental objectives and economic competitiveness. The Commission’s approach seeks to balance climate action with business-friendly policies, promoting long-term sustainability in the European market.
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