The aim is to reduce excessive administrative burdens, particularly for mid-sized companies and SMEs, without undermining the European Green Deal or broader ESG objectives. The changes target the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy Regulation, and the Carbon Border Adjustment Mechanism (CBAM).
One of the most significant changes concerns the CSRD. Under the new proposal, the reporting obligation will only apply to companies with more than 1,000 employees and an annual turnover above EUR 50 million, or a balance sheet total exceeding EUR 25 mln. This represents a substantial increase from the current 250-employee threshold, and as a result, around 80% of previously affected companies would fall out of scope. In addition, the deadline for companies in the second and third compliance waves is postponed by two years, meaning most firms will only begin reporting in 2028, rather than 2026 or 2027.
Companies falling below the new threshold are no longer subject to mandatory CSRD reporting but may opt into a voluntary framework, using simplified European Sustainability Reporting Standards (ESRS), which are currently being developed. These will abandon the previously foreseen sector-specific templates and focus instead on quantitative indicators. Narrative requirements will be reduced, and assurance obligations will remain limited to review-level verification, with further technical guidance expected by 2026.
The omnibus package also brings significant changes to the CSDDD. Instead of requiring companies to monitor their full value chain, the revised approach limits mandatory due diligence to a company’s own operations, subsidiaries, and direct (tier-1) suppliers. Only in cases of substantiated risk will downstream or indirect suppliers need to be assessed. Moreover, the mandatory termination of business relationships with non-compliant partners is replaced by a softer, risk-based engagement model. The frequency of due diligence cycles is reduced from annually to every five years, and proposed EU-level civil liability standards have been dropped, leaving such issues to member state legislation.
The EU Taxonomy Regulation will also be adjusted. Full alignment reporting will only be required for companies with more than EUR 450 mln in turnover and 1,000 employees. Others may disclose partial taxonomy alignment to highlight their progress without being penalized for incomplete compliance. A 10% materiality threshold will allow companies to exclude minor operations from disclosures. For financial institutions, Green Asset Ratio (GAR) calculations are simplified by allowing the exclusion of exposures to non-CSRD-covered entities.
The CBAM (carbon import levy) will be modified to introduce an exemption for importers whose goods generate less than 50 tonnes of CO₂ annually, effectively removing smaller operators from the compliance regime. The first full CBAM reporting and payment obligations are also deferred to 2027.
Hungary has already implemented the CSRD through amendments to its Accounting Act, effective from January 2024. In parallel, Hungary passed Act CVIII of 2023 (ESG Act), which imposes sustainability risk assessment and reporting duties on large companies and certain SMEs. If the omnibus package is adopted, Hungary will likely need to adjust the Accounting Act and the ESG Act to align with the higher thresholds, simplified due diligence requirements, and postponed deadlines. Notably, Hungary’s ESG Act anticipates full value chain screening and supplier disengagement, which may now be softened in line with EU trends.
The Omnibus Package reflects a shift in EU sustainability policy from expansion to refinement. It offers legal clarity, reduces regulatory complexity, and seeks to balance environmental commitments with economic realities. For Hungarian legal practitioners, tracking the final text adopted by EU co-legislators and preparing clients for a more proportionate, phased, and risk-based ESG compliance regime in the years ahead will be essential.
This article was first published in the Budapest Business Journal print issue of May 30, 2025.
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