The European Commission has adopted an omnibus package of legislative proposals to simplify EU sustainability and investment rules, including changes to sustainability reporting and the EU Taxonomy, sustainability due diligence, the Carbon Border Adjustment Mechanism (CBAM), and EU investment programmes such as InvestEU. The package is framed around an administrative burden-reduction target of at least 25% overall and 35% for small and medium-sized enterprises (SMEs) by the end of the mandate and is estimated, if adopted and implemented as proposed, to save around EUR 6.3 billion in annual administrative costs and mobilise around EUR 50 billion of additional public and private investment capacity. On sustainability reporting, the proposals would remove around 80% of companies from the scope of the Corporate Sustainability Reporting Directive (CSRD), postpone by two years to 2028 the reporting requirements for companies currently due to report as of 2026 or 2027, and aim to prevent large-company reporting requirements from cascading to smaller firms in their value chains. EU Taxonomy reporting would be limited to the largest companies (aligned with the scope of the Corporate Sustainability Due Diligence Directive, CSDDD), while other large companies in the future CSRD scope could report voluntarily, including on activities that are partially aligned; the Commission also proposes a financial materiality threshold, a roughly 70% reduction in reporting templates, and initial simplifications to certain “Do no Significant harm” criteria related to chemicals. For banks, the Green Asset Ratio would be adjusted by allowing exposures to undertakings outside the future CSRD scope to be excluded from the denominator, defined as companies with less than 1,000 employees and EUR 50 million turnover. On CSDDD, systematic due diligence would be focused on direct business partners, periodic partner assessments would move from annual to every five years with ad hoc assessments where necessary, information requests passed down the value chain would be limited for SMEs and small mid-caps, EU-level civil liability conditions would be removed while maintaining victims’ rights to full compensation under Member State regimes, and the application date for the largest companies would be deferred by one year to 26 July 2028, alongside bringing forward the adoption of guidelines to July 2026. On CBAM, a new cumulative annual threshold of 50 tonnes per importer would exempt small importers, eliminating obligations for approximately 182,000 importers (around 90%) while still covering over 99% of emissions in scope, alongside simplifications for remaining in-scope firms and strengthened anti-circumvention rules. Investment-programme changes would increase InvestEU capacity via returns from past investments and unused legacy funds, expected to mobilise around EUR 50 billion, and reduce administrative requirements with estimated cost savings of EUR 350 million. The proposals now go to the European Parliament and the Council for consideration and adoption, with CSRD, CSDDD and CBAM changes entering into force after co-legislators agree and the measures are published in the EU Official Journal. A draft delegated act amending Taxonomy delegated acts is planned after public feedback and would apply following the European Parliament and Council scrutiny period, with a call for evidence open on the Taxonomy delegated acts. The CBAM simplification is described as preceding a further scope extension, with a new legislative proposal on extending CBAM scope expected in early 2026.

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