Omnibus in Action: What it means for corporations in Germany and Italy

The European Union’s (EU) approach to corporate sustainability regulation has entered a period of profound reassessment. In response to practical experience and mounting concerns over regulatory complexity, 2025 has seen the introduction of the Commission’s so-called Omnibus Proposals – legislative packages aimed at streamlining and recalibrating the EU’s existing sustainability framework (for more details see our previous blogposts on the Omnibus Proposals here and the Council’s agreement here).

At the core of the packages are targeted revisions to four key instruments:

• the Corporate Sustainability Reporting Directive (CSRD);
• the Corporate Sustainability Due Diligence Directive (CSDDD);
• the Carbon Border Adjustment Mechanism (CBAM);
• the EU Taxonomy Regulation.

Collectively, these reform proposals move towards greater clarity, proportionality, and consistency – raising thresholds for applicability, extending deadlines, and reducing duplication. While regulatory simplification is the guiding principle, the changes create significant compliance implications for businesses in Europe, especially as national rules in major economies like Germany and Italy interact with the revised EU landscape.

This blog post analyses the principal features of the Omnibus Proposals and considers their impact on companies in Germany and Italy as examples, highlighting priorities and strategic considerations for building a resilient compliance framework.

CSRD

The CSRD is the EU’s central instrument for ESG disclosure, replacing the Non-Financial Reporting Directive (NFRD). It significantly expands the number of companies subject to reporting and introduces detailed, standardised requirements through the European Sustainability Reporting Standards (ESRS).

The CSRD, as proposed in 2022, currently applies in three phases (note that these are under review as part of the Omnibus Proposals):

Wave 1 includes large public interest entities (PIEs) and issuers on an EU-regulated market with more than 500 employees. These entities were already within the scope of the NFRD and were required to report under the CSRD from 2025 for the 2024 financial year.

Wave 2 covers all other large undertakings that meet at least two of the following: more than 250 employees, EUR 50 million turnover, or EUR 25 million total assets (originally due to report from 2026 for the 2025 financial year).

Wave 3 applies to listed small and medium-sized enterprises (SMEs), excluding micro-enterprises (originally due to report from 2027 for the 2026 financial year).

In response to concerns about administrative burden and company readiness, the EU has taken or proposed three key measures:

1. The Stop-the-Clock (STC) Directive (adopted and part of the Omnibus Proposals, see our previous blogpost here) defers reporting for Waves 2 and 3 by two years. Wave 2 companies would now have to report in 2028 for 2027, and Wave 3 in 2029 for 2028 in case the respective Member State transposes these new timelines as well. Wave 1 remains unaffected.
2. A Delegated Regulation, adopted on 11 July 2025 as a “quick fix”, provides for a two-year deferral of selected ESRS requirements for Wave 1 companies (previously applicable in full from 2025; see respective summary of deferrals). It is not yet in force but will apply if neither the European Parliament nor the Council objects.
3. One of the proposals within the Omnibus Proposals (not yet adopted) suggests, narrowing the CSRD’s scope to companies with more than 1,000 employees and EUR 450 million turnover. If implemented, this would exempt around 80 % of companies originally in scope. The Omnibus Proposals are subject to ongoing negotiations in Brussels, and the proposed changes have not yet been finalised.  

Implementation at national level varies:

• Germany has not yet transposed the CSRD, prompting EU law infringement proceedings by the EU Commission back in September 2024. On 10 July 2025, the government published a (new) draft bill proposing that Wave 1 entities report for the 2025 financial year, with the first sustainability report due in 2026. However, the draft also includes a temporary exemption for companies with 501 to 1,000 employees for the 2025 and 2026 reporting years. This exemption anticipates the possible adoption of the Omnibus Proposals and aims to avoid short-term obligations that may soon become obsolete. Legislation for Waves 2 and 3 is expected to follow separately.
• Italy, by contrast, has transposed the CSRD into national law through Legislative Decree No. 125/2024, which entered into force on 25 September 2024. PIEs already subject to the transposed NFRD have to report on the 2024 financial year starting 1 January 2025. Therefore, unlike the current German draft transposition bill which takes into account the Omnibus Proposals, Italy does not provide transitional exemptions for companies with 501 to 1,000 employees and has not implemented the two-year deferrals introduced by the STC Directive. It remains to be seen if Italy will do so at all.

In light of recent developments, the application of the CSRD may be subject to adjustments, so companies should remain attentive to factors that could influence how the directive applies to their group.

CSDDD

The CSDDD, is intended to impose on companies governance and supply chain due diligence obligations with respect to human rights and environmental standards. The Omnibus Proposals streamline the CSDDD by limiting core obligations to direct suppliers (and indirect suppliers in certain, evidence-based circumstances), soften requirements for SMEs, and clarifying climate transition planning. Based on the Commission’s and Council’s proposals, further adjustments to improve clarity may follow. In addition, the much debated civil liability clause shall be removed, reducing legal exposure and marking a shift towards a more pragmatic, business-friendly approach. However, these proposals remain subject to substantial negotiations as part of the ongoing European legislative process, and the proposed changes should therefore be monitored closely.

The STC Directive also extends the CSDDD’s transposition deadline to 26 July 2027, with application commencing a year later. This gives businesses and Member States breathing space for revision and adaptation.

Again, implementation at national level varies:

• Germany has not transposed the CSDDD as it already had enacted its own Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz), which is in force since July 2021, coming into effect on 1 January 2023 already. This Act covers many of the same obligations and thus provides a partial framework for alignment with the EU directive.
• Italy finds itself in a similar situation. It has not yet introduced a national law to implement the CSDDD, and legislative planning is still in its early stages. However, while there is no unified supply chain law, several existing regulations include specific supply chain due diligence obligations (e.g., the Antimafia Code, N. 159/2011, and the decree on quasi-criminal liability for corporations, N. 231/2001, which also sanctions direct and indirect labour exploitation (caporalato)).

For both jurisdictions, early engagement with suppliers and risk mapping will be essential to ensure a smooth transition.

CBAM

CBAM is a key element of the EU’s climate policy, imposing a carbon price on certain imports to encourage greener production globally. On 18 June 2025, the Council and the Parliament reached a provisional political agreement on the Commission’s Omnibus proposal to simplify CBAM obligations. 

The proposed changes would exempt importers of less than 50 tonnes of CBAM goods annually, effectively removing compliance obligations for around 90% of businesses while still capturing 99% of emissions. For those still subject to CBAM, reporting and verification requirements will be streamlined, reducing administrative costs.

Although the political agreement marks a decisive step, the legislative act must still be formally adopted by both the Council and the Parliament before entering into force. Once adopted, the changes will apply directly in all Member States, including Germany and Italy.

EU Taxonomy Regulation

The EU Taxonomy Regulation – like CBAM – is directly applicable across all Member States, counting Germany and Italy. It standardises classification of environmentally sustainable activities and underpins both CSRD and sustainable finance disclosures. The Omnibus Proposals seek to narrow their scope, particularly for SMEs as well as for corporates without significant financial services activity, while keeping the primary obligations unchanged. 

Key changes include:

• Relaxation of the Do No Significant Harm (DNSH) criteria, which are used to ensure that sustainable activities do not negatively affect other environmental goals. This change is expected to reduce compliance costs by an estimated 70%.
• Financial institutions would no longer be required to include exposures to companies that are not subject to CSRD in their Green Asset Ratio (GAR). In practice, this means banks and insurers would only need to report on investments in companies that already publish standardised sustainability data.

Overall, the proposed changes to the reporting requirements under the Omnibus Proposals aim to make the system more accessible and less costly for businesses. 

What businesses in Germany and Italy should do now

To turn the uncertainty with the Omnibus Proposals into an advantage, companies should:

1. Review and realign organisational governance: Ensure that board, supervisory, and ESG committee responsibilities are clearly defined and up to date, with robust escalation channels and strategic oversight of sustainability, compliance, and risk. Boards and senior leaders should have a direct line of sight on emerging regulatory changes and overall accountability for ESG.
2. Strengthen operational compliance and reporting infrastructure: Build or enhance integrated systems and processes for ESG due diligence, and carbon data collection and reporting, in line with CSRD, CSDDD, CBAM, and EU Taxonomy requirements. Facilitate alignment among legal, compliance, and business units to ensure seamless day-to-day execution and rapid adaptation.
3. Establish and stress-test investigation and escalation protocols: Formalise, test, and communicate procedures for responding to internal incidents, whistleblowers, and third-party complaints regarding ESG matters. Ensure your protocols meet the expectations of multi-jurisdictional investigations and can withstand regulator scrutiny.
4. Engage proactively with regulators and authorities: Maintain open and structured dialogue with supervisory bodies, closely track new guidance or legislative developments at national and EU level, and document compliance strategies and risk assessments to substantiate good faith and diligence.
5. Minimise litigation and reputational risk through legal oversight: Require legal and compliance oversight of all ESG disclosures, public statements, and communications. Anticipate and prepare for greenwashing allegations, enforcement, or follow-on litigation with defensible processes and well-documented decisions.

Looking ahead

The Omnibus Proposals signal a decisive move towards a more streamlined and proportionate EU sustainability regime, easing compliance burdens for many companies by raising thresholds, narrowing scope, and delaying certain obligations. Not only for businesses in Germany and Italy, this regulatory reset presents a valuable opportunity to optimise internal processes and build more agile, scalable ESG frameworks.

Compliance expectations are shifting: while many organisations will face fewer prescriptive requirements, those remaining in scope – especially large and listed companies – must ensure their sustainability data and governance remain credible and resilient. Regulatory focus may narrow, but investors and key stakeholders continue to demand reliable, comparable ESG information.

Ultimately, companies that act now to enhance data quality, embed adaptability and maintain robust documentation will be best prepared for evolving requirements and market scrutiny. In an environment balancing pragmatism with sustained accountability, future-proofing compliance is key to maintaining both regulatory confidence and competitive edge.

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