EU sustainability regulations 2025 in review: What changed and what matters for 2026

2025 is coming to an end, and few years have been as transformative for sustainability teams across Europe. What started as a political push for simplification evolved into a fundamental recalibration of EU sustainability regulation.

From the Omnibus reform to ESRS simplification, CBAM enforcement and EUDR delays, this article summarizes what mattered most in 2025 and what companies should prepare for in 2026.

The EU Omnibus: A year of political recalibration

The EU Sustainability Omnibus dominated the regulatory agenda in 2025. Initially announced as a simplification effort, it developed into a year-long legislative process that reshaped the scope and ambition of sustainability reporting in the EU.

February 2025: Commission proposal

In February, the European Commission formally presented Omnibus I, covering CSRD, EU Taxonomy, CSDDD and CBAM. The direction was clear: greater competitiveness through fewer companies in scope, fewer datapoints, and less regulatory overlap.

For CSRD, the Commission proposed:

• limiting scope to companies with more than 1,000 employees and either
• €50M turnover or €25M balance sheet total
• postponing first reporting for Wave 2 companies to FY 2027

June 2025: First political alignment

By June, the Council of the EU agreed on its position, tightening the scope further by raising the turnover threshold to €450M, while keeping the 1,000-employee criterion.

October - November 2025: Parliamentary friction

The political debate intensified in autumn:

• In October, a compromise proposal led by the JURI committee narrowly failed in Parliament.
• In November, a mid-right majority supported an even stricter narrowing of scope, temporarily limiting CSRD and EU Taxonomy obligations to companies with more than 1,750 employees and over €450M turnover.

December 2025: Provisional agreement

In December, Parliament and Council reached a provisional agreement that fundamentally reshapes sustainability reporting:

• CSRD and EU Taxonomy apply only to companies with
• more than 1,000 employees and more than €450M net turnover
• Around 90% of initially scoped companies fall out of direct reporting
• Member States have 12 months for national transposition

CBAM: From learning phase to enforcement

While CSRD was scaled back, CBAM moved decisively towards enforcement.

February 2025: Omnibus proposal

As part of Omnibus I, the Commission proposed limiting CBAM obligations to importers exceeding 50 tonnes of covered goods per year, while still covering 99% of embedded emissions. A provisional agreement followed in June.

October 2025: Adoption of simplifications

The CBAM Simplification Amendments were adopted into law:

• The definitive CBAM regime starts in 2026
• CBAM certificates for 2026 imports can be purchased from February 2027
• Data quality and supplier engagement remain the central operational challenges

December 2025: Expansion announced

In December, the Commission announced its intention to:

• extend CBAM to 180 additional CN codes for downstream products (e.g. washing machines, car engines)
• strengthen anti-circumvention rules

This expansion could bring 7,500 additional companies into CBAM scope, signalling further regulatory tightening ahead.

ESRS: Fewer datapoints, clearer focus

Alongside the Omnibus, ESRS simplification progressed steadily throughout 2025.

March 2025: Simplification mandate

EFRAG was formally mandated by the Commission to revise the ESRS, making them:

• simpler to apply
• easier to audit
• aligned with the new political direction

Mid-year: Design principles

By mid-2025, clear principles emerged:

• significantly fewer mandatory datapoints
• stronger focus on quantitative disclosures
• clearer application of double materiality
• removal of voluntary disclosures

December 2025: Revised draft published

In December, EFRAG published a revised ESRS draft with:

• around 60% fewer mandatory datapoints
• a clearer and more structured architecture

Application is expected from reporting year 2027, subject to formal adoption, currently expected in June 2026.

EUDR: Postponed, but not softened

The EU Deforestation Regulation (EUDR) returned to the spotlight late in the year.

October 2025: Commission proposal

Due to an unready IT system, the Commission proposed:

• postponing entry into force
• introducing a 6-month grace period
• simplifying requirements for SMEs and downstream operators

November 2025: Fast-track negotiations

Parliament and Council acknowledged the need for broader relief, agreeing to:

• postpone EUDR by another year
• ease due diligence obligations for downstream operators and traders

December 2025: Adoption

The amended EUDR will be formally adopted in 2025:

• Application date extended to 30 December 2026 for medium and large companies
• Transitional relief for micro and small primary operators, with application from 30 June 2026
• A Simplification Review will assess administrative burdens, especially for small operators
• Core due diligence and traceability obligations remain unchanged for operators, while downstream actors benefit from regulatory easing

What companies should take into 2026

Despite simplification and scope reductions, the fundamentals remain unchanged.

Companies should continue to focus on:

1. Building a reliable ESG data backbone: Including CCF, PCF, supplier data and governance structures
2. Designing scalable, ROI-driven processes: Instead of one-off compliance projects
3. Prioritising verifiable, quantitative disclosures: Keeping double materiality practical and decision-oriented

Conclusion: 2025 was about speed of change, not just regulation

2025 was not only about where EU sustainability regulation landed, but about how quickly priorities can shift. Companies that used this year to build scalable, auditable ESG data foundations enter 2026 with a clear advantage whether they remain formally in scope or not.