The EU Omnibus Simplification Package: Key Changes and Implications

The European Union's Omnibus Simplification Package, introduced on February 26, 2025, seeks to reduce regulatory complexity and support businesses, particularly in sectors like fashion, by streamlining sustainability and corporate reporting requirements. The goal is to help companies navigate complex regulations while maintaining the EU’s sustainability ambitions. By simplifying certain legislative processes, the package aims to strike a balance between easing business burdens and upholding the EU’s commitment to environmental and social responsibility. 

Key Changes in the Omnibus Package 

Corporate Sustainability Reporting Directive (CSRD) 

Narrower Scope: The CSRD now applies only to large companies with over 1,000 employees, €50 million turnover, or €25 million in assets. Smaller companies are not directly affected. 

Exemption: Companies no longer need to collect data from non-CSRD companies in their supply chain, reducing reporting complexity. 

Postponed Deadlines: Reporting deadlines for large companies and listed SMEs have been extended by two years, giving more time to comply. 

Limited Assurance: Instead of full audits, companies now need only limited assurance for sustainability reports, reducing the compliance burden. 

Corporate Sustainability Due Diligence Directive (CSDDD) 

Deadline Delay: The compliance deadline is extended from July 2027 to July 2028, allowing businesses more time to implement required processes. 

Simplifications: Smaller companies are exempt from some due diligence requirements, and supply chain checks are limited to direct business partners. 

General Simplifications:  

For smaller companies, the Omnibus package introduces various relaxations, including exemptions from certain reporting and due diligence requirements. Additionally, businesses will now only be required to conduct supply chain checks on direct business partners, simplifying the process and reducing the scope of responsibility for companies further down the supply chain. 

Impact on Businesses 

The Omnibus Simplification Package is designed to make it easier for companies, especially in the fashion sector, to comply with EU sustainability regulations. By reducing administrative costs and simplifying compliance processes, the package supports economic growth and competitiveness within the EU. 

The delay in reporting deadlines and the move to a more flexible assurance standard provide companies with additional time and resources to ensure they can meet sustainability requirements without disrupting their operations. These changes should also reduce barriers to investment, encouraging growth and fostering a more sustainable business environment in the EU. 

However, while the package offers some relief, it is important to note that the EU's broader environmental, social, and governance (ESG) commitments remain unchanged. Companies are still required to adhere to high standards of sustainability and transparency, ensuring that the Omnibus package does not undermine the EU’s climate goals. 

No Change to Ecodesign and DPP Legislation 

Importantly, the Omnibus package does not change or simplify the Ecodesign or Digital Product Passport (DPP) legislation. These key regulations will still require companies in the fashion industry to gather detailed information about their products, including supply chains, raw materials, and product lifecycles. 

Ecodesign, which will be implemented in mid-2025, mandates that companies collect data on the origins of their products and their environmental impact throughout their lifecycle. The introduction of Digital Product Passports (DPPs) will also support this effort by enabling brands to track the sustainability credentials of their products through digital tools. Although the Omnibus package eases some reporting requirements, companies in the fashion sector must continue to focus on integrating circular economy practices, product traceability, and sustainability into their business strategies. 

Sustainability in Fashion: Opportunities and Business Strategy 

The Omnibus package encourages fashion companies to adopt digital tools, such as Digital Product Passports (DPPs) and other traceability solutions, to improve sustainability reporting. These tools enable better tracking of products and collections, which not only helps businesses comply with regulations but also enhances operational efficiency and profitability. Digitalization allows fashion brands to better manage their supply chains and meet circularity and ecodesign goals by providing transparent data on product lifecycles and material origins. 

This shift toward digital solutions also supports the industry's broader sustainability objectives. By leveraging DPPs, fashion brands can collect and share detailed product data, making it easier to meet regulations and build trust with consumers who increasingly prioritize sustainability. Additionally, digital solutions facilitate circular economy practices by ensuring that products are designed for reuse, recycling, and sustainability from the outset. 

Conclusion 

The Omnibus Simplification Package provides significant relief for businesses, particularly in the fashion industry, by easing some reporting requirements and extending compliance deadlines. However, it does not alter the EU’s strong sustainability goals, especially regarding Ecodesign and Digital Product Passports. Fashion companies must continue to focus on sustainability, traceability, and circularity as essential parts of their business strategies. Digital tools will play a critical role in helping businesses meet these goals, comply with regulations, and enhance operational efficiency. For fashion brands, embracing digitalization is not just a regulatory necessity but a strategic advantage for long-term success. 

Sources:

EY: How to navigate the EU Omnibus Simplification Package, Key Implications for Companies

Scandinavian MIND | What EU’s Omnibus means for fashion (with Staffan Olsson) 

EU Omnibus Simplification Package: What You Need to Know  - Sedex 

Navigating the New EU Omnibus Package (and Avoiding Blind Spots) | Oritain