EU Omnibus Package

Europe is witnessing a regulatory reboot in sustainability reporting, with the European Commission’s Omnibus package setting a new course for compliance.

This new development offers a somewhat surprising turn by easing up the regulations for SMB fashion businesses, providing much-needed relief while still demanding robust ESG and CSRD commitments from larger enterprises.

The Omnibus package is intended to reduce administrative burdens for SMEs in the long term. Although some estimates suggest potential reductions of up to 35%, the reality is that smaller businesses may initially face additional efforts and resources as they adapt to understand new reporting thresholds and exemptions.

The reforms affect major areas such as the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the Carbon Border Adjustment Mechanism (CBAM), and InvestEU.

These changes aim to streamline sustainability reporting in the EU, making processes more efficient and better tailored to the diverse needs of businesses.

For many SMBs in the fashion and textile industries, the regulatory changes mean that only larger companies with more than 1,000 employees are subject to full CSRD reporting. This leaves companies with fewer than 500 employees under a simplified, often voluntary framework—at least from a purely legal standpoint.

However, SMEs may still feel indirect pressure. Larger companies, retailers, and financial institutions often request consistent sustainability information from all partners, including smaller suppliers, to meet their own reporting obligations.

Consequently, smaller businesses can still find themselves obliged to meet near-identical standards of transparency—even if they’re not formally bound by CSRD requirements.

Moreover, the “value chain cap” is designed to ensure that large companies or banks cannot impose excessive data requests on smaller suppliers.

While it limits disproportionate demands, it doesn’t eliminate the broader, market-driven expectation for robust ESG reporting. In practice, this measure aims to help SMBs remain agile and focus on core creative operations while still providing the clarity and accountability that consumers and larger partners increasingly expect.

While these recent reforms offer welcome simplifications for smaller fashion and textile businesses, the broader sustainability reporting landscape continues to shift. Uncertainties remain about how new regulations will be interpreted in practice and how supply-chain partnerships may evolve.

Ensuring the accuracy and availability of your data is a worthwhile investment in future-proofing your business—whether you’re preparing to meet legal obligations or responding to rising expectations for transparency from customers and marketplaces.

Ultimately, ESG and CSRD compliance remains a moving target—one best approached through ongoing adaptation, transparent communication, and a commitment to sustainable innovation.