In the midst of the push to rebuild Europe’s competitiveness, innovation and manufacturing capacity, there’s been much speculation about the "Omnibus Simplification" agenda. While information is still emerging on the specifics of the agenda, there’s more than enough to spark debate.
The term "Omnibus" refers to a legislative package that consolidates multiple measures into a single proposal. Currently, the European Commission is preparing to introduce the first Omnibus Simplification Package, aimed at streamlining sustainability reporting requirements for companies within the European Union, with its publication scheduled for 26th February (or, if postponed, in early March).
Some EU member states advocate for easing the reporting rules to reduce administrative burdens on businesses, while others emphasize the importance of maintaining robust environmental and human rights standards.
What’s not helping the debate is that many of its participants, from policymakers to the media, are mixing ‘simplification’ with ‘deregulation’ as if these terms were interchangeable. They aren’t. The Commission outlines the Omnibus as a means to simplify sustainability reporting regulations while maintaining high levels of ambition. However, at the same time, the Commission has committed to a deregulation agenda, aiming to reduce reporting obligations by at least 25% — and for SMEs, at least 35%. So, are we simplifying (making regulation easier to apply, clearer to understand and more efficient)? Or are we deregulating (reducing regulation to allow more freedom for businesses or individuals)?
To me, it is clearly both. Hopefully, this is done while truly maintaining the ambition to provide transparency into where companies stand in terms of sustainability and their impacts. I fully support strong transparency and the double-materiality principle – an approach that, though surprising to many, was profoundly embedded from the outset in the Non-Financial Reporting Directive (NFRD). From its origins, the double-materiality principle ensured that companies disclose both how sustainability factors influence their business and how their business impacts people and the planet. I’ve also been a strong advocate for sector-specific standards. Sustainability and performance in, for instance, real estate, looks very different from that in the auto manufacturing industry. What you measure matters, and what you disclose matters, too.
At the same time, I fully recognise the need to simplify regulation, especially for non-listed SMEs. This space is crucial for impact investors, given that the greatest impact is often generated in private markets, particularly among the most innovative startups. It is also where the biggest funding needs exist: impact-driven capital that helps companies cross the “valley of death,” the challenging transition from startup to a sustainable financing model.
Smart regulations can enable SMEs to cross that valley. Conversely, burdensome regulations can suffocate small, impact-driven companies, including social enterprises, by forcing disproportionate reporting on sustainability.
Many of these companies — particularly in the impact investing space — already provide extensive, relevant information about the positive impact they aim to achieve and how they measure progress. These are some of Europe’s most innovative businesses: companies with vision, execution skills and a determination to solve pressing social challenges from climate change to child poverty. Consider Brinos, which provides early pre-screening and monitoring for behavioral changes in children with autism, or Whispp, a deep-tech startup with an AI-powered app that converts whispered or impaired speech into clear, natural voice in real-time.
These are the kinds of companies impact investors are looking for.
Some prioritize impact first, as is the case with social enterprises. Others pursue impact while also generating returns, enabling them to scale solutions, expand and even compete on a global scale. Take Powerful Medical, a health-tech firm leveraging AI to accelerate diagnostics, reduce healthcare costs, and enhance accessibility — all while generating revenue and improving healthcare inclusivity (EPSR 16, SDG 3).
Now, contrast that with Martin Shkreli, former CEO of Turing Pharmaceuticals, who infamously raised the price of the life-saving drug Daraprim from $13.50 to $750 per pill overnight, a hike of over 5,000%. This strategy aimed to maximize profits for investors, disregarding the detrimental impact on patients and healthcare providers.
These examples show that we must not focus solely on innovation and competitiveness. Innovation can be misused, exacerbating inequality rather than serving the public good. That’s why we need a double-materiality principle in disclosure.
Balancing the reporting burden
I’m not saying all companies must be impact driven. But when companies are intentionally designed for impact, and when investors actively seek them out, it deserves attention, recognition and intentional policy support to foster their growth.
Impact-driven businesses show clear alignment with the public good. But how are policymakers to determine which innovations, startups and scale-ups should receive public EU grants to catalyse their growth?
I strongly welcome the Commission’s focus on innovation, startups and scale-ups, but this must go hand in hand with enabling them to demonstrate the depth of their sustainability ambition. At a minimum, there must be fundamental information on how their innovation impacts — or is expected to impact — society and the environment.
As established earlier, the coming Omnibus aims to reduce the burden of reporting. But it’s puzzling to find that there were already simplification solutions in play that seem to be ignored in the Omnibus. For instance, EFRAG was tasked with developing a voluntary standard for non-listed SMEs (VSME). Unlike large corporations, non-listed SMEs are not subject to CSRD, CSDDD, or EU Taxonomy reporting requirements. Instead, their standard is designed to help them initiate sustainability reporting if they haven’t started yet and enable impact-driven companies to disclose ESG metrics efficiently without compromising their core mission. It seems policymakers have overlooked this approach — almost as if the VSME framework has been forgotten by the Commission itself.
That framework is still very relevant for the impact investing ecosystem, as outlined here. The real opportunity lies in guiding large investors — who are subject to SFDR — to request CSRD/Taxonomy-required information from in-scope companies while preventing an excessive trickle-down effect on smaller businesses. Supply chain due diligence should be about targeted, foundational-level information, not an unrealistic burden on every SME.
Core priorities
One thing is clear: investors won’t stop demanding transparency. They seek meaningful, comparable data on companies' sustainability performance and impacts. 163 investors — representing approximately €6.6 trillion in assets under management — have signed the Joint Statement of IIGCC, PRI, and Eurosif. Many of Impact Europe’s members are among them. Regulatory changes won’t change their priorities; they will continue to push for sustainability and impact information.
The real question is whether we make this process standardised, streamlined and fit for purpose — or leave companies drowning in fragmented, duplicative requests.
If Europe is serious about reallocating private capital to finance its transition toward a sustainable, innovative and competitive economy, now is not the time to slam the brakes on our vision for the future. Instead, we must have the courage to help companies get there, through a sustainability reporting framework that is simple, yet ambitious and meaningful.