Omnibus package controversies
The announcement of the Omnibus I and II package by the European Commission was met with mixed reactions, ranging from satisfaction to serious concerns. Although the package aimed to simplify and relieve the burden on companies, there was no shortage of criticism.
Controversy and accusations
Dilution of EU climate ambitions Critics - especially NGOs and some MEPs - accuse the Commission of watering down the EU's climate and social ambitions with the pretext of simplifying regulation. Limiting the number of companies covered by the CSRD or abandoning sectoral standards is, according to many, a step backwards.
Lack of public consultation It has been pointed out that the package was developed in a hurry, without sufficient stakeholder consultation, which undermines the transparency and legitimacy of the whole process.
Risk of greenwashing Simplifications, such as the reduction of the value chain reporting obligation, may facilitate the pretence of ESG measures rather than their real implementation.
Pluses perceived by the market
Relieving the burden on SMEs Exempting smaller companies from ESG reporting obligations has been welcomed - many do not have the resources to meet stringent regulatory requirements.
Greater predictability and clarity Clear criteria, simplified standards and reduced value chain obligations give companies more regulatory certainty and reduce the risk of errors.
Reduced implementation costs Reduced verification requirements and data coverage mean lower costs for the business, especially in the transition phase.
Downsides noted by stakeholders
Undermined trust in ESG reporting Weakened obligations may result in a loss of investor and consumer confidence in published data.
Risk of fragmentation of ESG data in the EU Less involvement of smaller companies may lead to inconsistent data across the value chain, making analysis and assessment of ESG risks more difficult.
Here is a comparison of the positions of different stakeholder groups towards the Omnibus I and II packages, including key objections, concerns and perceived benefits:
Comparison of stakeholder positions towards the Omnibus package
Stakeholder Group | General Position | Perceived Advantages | Main Concerns / Criticism |
Non-governmental organizations (NGOs), climate think tanks | Critical | – None; the package is seen as a weakening of climate and social policy | – Weakening of the EU's climate and social ambitions – Facilitates greenwashing – Lack of transparency and stakeholder consultation – Abandonment of sector-specific standards |
Small and medium-sized enterprises (SMEs) | Welcomed the changes | – Delayed reporting deadlines – Exemption from EU Taxonomy obligations – Lower ESG implementation costs | – Risk of being unprepared for future regulations – Continued pressure from large companies despite no formal obligations |
Large enterprises (especially from industrial sectors) | Cautious optimism | – Greater reporting flexibility – Clarity on obligations – Fewer data requirements from suppliers | – Lack of tools to assess ESG risks throughout the value chain – Difficulty comparing non-financial data |
Investors and financial institutions | Mostly critical | – Some transparency in large companies remains intact | – Risk of fragmented and inconsistent ESG data – Harder to monitor non-financial risks in investment portfolios |
Advisory firms, auditors, ESG consultants | Neutral to moderately critical | – Easier implementation for clients – More time to prepare the market | – Lack of sector-specific standards complicates consulting – ESG services market may slow down |
EU institutions (European Commission, some Member States) | Positive (package initiators) | – Response to “regulatory fatigue” in business – Reduced bureaucracy – Realistic implementation timelines | – Criticized by the European Parliament and some countries as overly lenient toward business |
Conclusions
Stakeholder split: NGOs and the financial sector see the package as a weakening of the ESG regime, while SMEs and large industry see it as a real relief.
Diverging risk perceptions: For investors the risk is the lack of data, for SMEs the cost of generating it.
Need for balance: The challenge will now be to clarify standards and obligations in such a way that smaller companies are not discouraged, but also that sustainability objectives are not diluted.
Summary
The Omnibus Package is a compromise between regulatory ambition and a realistic approach to the capabilities of companies - especially SMEs. Some see it as a step towards common sense, others as a threat to the credibility of the sustainability transition. The discussion is likely to continue with further revisions of directives and standards.