ECB Omnibus Package: A Missed Opportunity for Smarter Regulation

On 26 February 2025, the European Commission (EC) published its Omnibus Package, aiming to streamline sustainability reporting requirements. This package addresses the growing concern over excessive regulatory burdens around Environmental, Social, and Governance (ESG) reporting.

The package includes proposals related to the Corporate Sustainability Reporting Directive (CSRD) as well as changes to the Corporate Sustainability Due Diligence Directive (CSDDD), the Carbon Border Adjustment Mechanism (CBAM), and regulations tied to EU investment programs. Additionally, the EC has issued a draft Delegated Act proposing amendments to the EU Taxonomy Regulation (EUT). These changes would reduce mandatory data points, relax certain reporting requirements, and eliminate the shift toward reasonable assurance in ESG reporting. Other notable changes include a delay in reporting obligations for certain companies, a reduction in the requirements for value chain data collection, and a shift towards prioritizing quantitative over qualitative disclosures. While these measures seek to ease compliance, they also raise concerns about reduced transparency and accountability.

Instead of trimming the requirements, scope and assurance, the EC could have focused on reducing the reporting burden while simultaneously focusing the availability and usability of information for investors and other stakeholders. One way to achieve this would have been to consolidate overlapping regulatory frameworks, such as Pillar 3 disclosures and EU Taxonomy (EUT) reporting where most of the information from EUT is also being requested for Pillar 3 reporting. Additionally, eliminating redundant data requests across different regulations would have significantly eased the compliance workload for institutions and improved the readability for stakeholders. Instead, the approach taken in the Omnibus Package appears to downgrade the importance of reporting by removing the reasonable assurance requirement — a move that could ultimately undermine confidence in ESG disclosures.

So, what does this mean for financial institutions? Despite the changes in regulatory requirements, institutions should proactively integrate sustainability into their operating models and subsequently into their finance and risk environments. A centralized, integrated approach to data collection and usage is essential not just for compliance but also for effective risk management, reporting and business decision-making, particularly in the context of climate risk. Institutions should not wait for regulatory requirements to dictate their approach to considering ESG factors into their operating model but should instead view it as a strategic asset. By embedding sustainability into core financial and risk frameworks, firms can enhance resilience, optimize capital allocation, and strengthen their competitive position in an increasingly sustainability-focused financial landscape.

Institutions that take control and invest in their ESG data strategy today do not have to constantly react to regulatory requirement changes— instead, they’ll proactively shape their own future. Also, for the regulator there is work to do as the ESG reporting requirements should as much as possible be requested according to the MACE principle, even across regulators. If you would like to discuss what Mount Consulting can do for your ESG data strategy, please do not hesitate to contact us.