‘Omnibus’ package explained: Key proposed changes to the EU Taxonomy

In this article, we break down the key proposed changes to the EU Taxonomy. But before anything else, let’s explain what we’re talking about.

Omni-what?

On 26 February 2025, the European Commission proposed a series of changes to key EU sustainability reporting regulations. These updates affect the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy for sustainable economic activities, and the Carbon Border Adjustment Mechanism (CBAM).

These proposals follow an ‘Omnibus’ approach—a legislative process that amends multiple related laws simultaneously to improve alignment and minimize inconsistencies. As the EU shifts its focus toward economic competitiveness and security, this Omnibus package aims to simplify non-financial reporting requirements, making compliance more straightforward for businesses across the EU.

The basics of the proposed changes

Who needs to report?

EU Taxonomy reporting remains applicable for the largest companies, aligning with the CSDDD scope, i.e. those with more than 1,000 employees and a net turnover of more than €450M. 

For large companies out of the future CSRD scope (over 1,000 employees and up to €450 million in net turnover), the Omnibus proposal makes EU Taxonomy reporting optional, reducing the number of companies required to comply. Companies that partially meet EU Taxonomy criteria can choose to report their progress voluntarily, though.

Trickle-down effects are expected for all companies within a large corporate group, as well as those funded or owned by a financial product subject to SFDR Article 8/9.

Simplifying the reporting process

The EU Commission’s proposal aims to streamline reporting and reduce complexity. Key measures include:

• Simplified reporting templates – Reducing data points by almost 70%.
• Materiality threshold – Companies can exclude economic activities that are not financially material, with a 10% de minimis threshold. In other words, this is a threshold (set at 10%) below which large economic activities that are not financially material can be excluded from compliance assessments against the technical screening criteria.
• Updates to financial sector KPIs – Banks will be able to exclude exposures linked to companies outside the future CSRD scope from their Green Asset Ratio (GAR) denominator.
• ​​Decreased formal EU Taxonomy reporting – Formal EU Taxonomy reporting is expected to decrease significantly, with limited value in voluntary reporting.
• Partial alignment reporting – Large undertakings may be allowed to report “partial alignment,” disclosing turnover, CAPEX, and OPEX that meet only certain parts of the technical screening criteria.

Addressing complexity in “Do No Significant Harm” (DNSH) criteria

The logic of the EU Taxonomy’s “classification system” remains unchanged. There has been no attempt to alter the definition of what constitutes an “environmentally sustainable activity,” meaning that Substantial Contribution (SC), Do No Significant Harm (DNSH), and Minimum Safeguards (MS) will continue to be essential requirements. The main change focuses on which companies are required to report using the classification system and to what extent, with partial alignment reporting now allowed.

Regarding DNSH, two key updates have been proposed:

• Simplifications to the pollution prevention and control criteria outlined in the generic Appendix C.
• The Commission will initiate a review of all DNSH criteria to simplify them (note: this does not mean reducing the “definition” of DNSH).

At Position Green, we recommend approaching them as follows:

While formal reporting may be reduced, the rationale behind the EU Taxonomy remains relevant for all companies. Businesses are encouraged to communicate their impact in a more narrative-driven way, focusing on:

• How their company, products, or services deliver a positive impact without causing significant harm in other areas.
• Which parts of their revenue streams come from products or services that contribute to sustainable development and real-world solutions.
• Which parts of their CAPEX/investments support a sustainable transition.

The principles of the Taxonomy continue to be valuable when developing internal sustainability strategies. In other words, it’s about ensuring your company contributes to sustainable development while minimizing any potential negative impacts.

How likely is it that the proposed changes to the EU Taxonomy become reality?

At this stage, all changes to the EU Taxonomy are still just proposals, not definitive actions. The European Commission’s suggestions will need to go through several stages before they can become law:

1. The EU’s legislative process: The European Parliament and Council (which represents the governments of all 27 EU Member States) will first discuss the proposed changes individually and then negotiate a compromise.
2. National implementation: Once the changes are agreed upon, each EU country will need to incorporate them into their own laws.

At this point, it’s difficult to predict how smoothly the EU Commission will be able to defend its proposals during the legislative process.

In the Council, large Member States such as Germany, France, and Poland are expected to support the changes (or may even wish to go further). However, countries like Italy and Spain may view the proposed changes as too extreme. Overall, it is anticipated that there will be a majority in favor of the changes.

“While the core principles of the EU Taxonomy remain intact, key updates focus on which companies need to report and to what extent, with an emphasis on reducing complexity.”

Tony Christensen – Director, Position Green

In the European Parliament, the Commission will likely face more resistance. Ideological and political objections are expected, particularly around concerns that the changes could “water down” the EU’s green goals. Centre-right parties are likely to back the proposals and could form a majority if they align with more extreme right-wing parties. However, this would break a longstanding EU tradition of finding compromises across the centre, avoiding far-right or far-left influence. Ideally, a balanced approach between the centre-right and Social Democrats would emerge, potentially modifying the Commission’s proposals in the process.

Regarding the timeline, some changes may be expedited. However, EU processes usually take many months, even years. Given the urgency for legal clarity, the European Commission is pushing for a “fast-track” process that could enable adoption and transposition of the changes within this year. Whether this will be feasible remains to be seen.

Until the updated EU Taxonomy is adopted, the current version of the EU Taxonomy and its provisions in national legislation will remain in effect.

To sum up…

The proposed changes to the EU Taxonomy under the ‘Omnibus’ package aim to simplify reporting requirements and make compliance more manageable for businesses. While the core principles of the EU Taxonomy remain intact, key updates focus on which companies need to report and to what extent, with an emphasis on reducing complexity. As the proposals move through the legislative process, companies should stay informed and be prepared for potential changes. The final outcome will shape how businesses report on sustainability and contribute to the EU’s green goals in the coming years. 

But how do the EU Commission’s proposals impact the CSRD and ESRS? Dive into this article for expert insights from Position Green’s Brussels-based Chief Growth Officer, Julia Staunig, who has over two decades of experience navigating EU regulations.