Market Pulse 2025: How are companies reacting to the Omnibus Proposal?

Over the past few weeks, Coolset surveyed more than 250 mid-market and enterprise companies to understand their response to regulatory shifts. The results are in: sustainability reporting isn’t going anywhere. 

The Omnibus Proposal has introduced uncertainty, but most businesses are adapting rather than stepping back. While large firms continue with CSRD despite delays, smaller businesses are considering voluntary compliance or the new VSME framework.

Most companies see ESG reporting as a strategic advantage rather than just a compliance task. Despite regulatory changes, 90% plan to continue reporting. Stakeholder pressure remains strong, with 85% of businesses stating that ESG transparency is still important to investors, customers, and partners. However, 46% of companies are still assessing how the Omnibus Proposal will impact their reporting obligations. Many are turning to technology to streamline the process and reduce costs.

What the Omnibus Proposal means for ESG reporting

Released on February 26, 2025, the Omnibus Proposal aims to simplify sustainability regulations and reduce compliance burdens, particularly for mid-sized businesses. If passed, key directives such as CSRD, EU Taxonomy, and CSDDD would be scaled back. However, the proposal is still under review and must be adopted by the European Parliament and EU Council before any changes take effect.

Under the proposal, CSRD would apply only to companies with more than 1,000 employees, exempting many mid-sized firms. The reporting deadline for Wave 2 companies has been extended to 2028. The VSME is introduced as a voluntary ESG reporting option for SMEs, providing a structured yet lower-burden alternative. EU Taxonomy reporting would become voluntary for mid-sized firms, while CSDDD compliance would begin in 2028 with a reduced enforcement framework.

How companies are reacting

Despite regulatory uncertainty, most businesses are maintaining ESG reporting. Companies that have already invested in sustainability see it as a long-term business advantage. 67% of companies plan to continue CSRD reporting, with 40% doing so voluntarily and 27% due to legal requirements.

Stakeholder expectations remain high. Investors, customers, and corporate partners continue to demand ESG data. Even for businesses no longer required to report, sustainability transparency remains critical for securing financing and maintaining credibility. Many companies are prioritizing automation to streamline ESG reporting and reduce administrative burdens.

The biggest challenges for businesses right now

The Omnibus Proposal has left many businesses questioning their next steps. Some are unsure whether to continue preparing for CSRD or wait for final regulatory decisions. While some companies assume Omnibus will pass and adjust their approach now, this remains a risky move. The proposal is still under review and could be revised, delayed, or even rejected. ESG transparency is still a business priority, regardless of legal requirements.

Companies near the 1,000-employee threshold face uncertainty about their future reporting obligations. Since the threshold applies to global headcount, multinational firms must assess their workforce carefully. Many businesses are exploring whether the VSME is the right alternative to CSRD. For those looking to maintain structured ESG reporting while reducing compliance costs, VSME provides a practical solution.

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What this means for businesses moving forward

Businesses must choose whether to continue with CSRD, adopt VSME, or pause ESG reporting altogether. Companies that have already invested in compliance may benefit from staying the course, while others may find VSME a more manageable alternative. Pausing ESG reporting carries risks, as market expectations remain high even if legal requirements change.

In the long term, compliance costs may decrease, but ESG transparency will remain essential. The removal of mandatory audits under the Omnibus Proposal could ease financial burdens, but investors and corporate clients still expect credible disclosures. Businesses that continue integrating sustainability into their strategy will be better positioned for the future.

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Next steps

With regulations still evolving, staying informed is crucial. Companies should evaluate which reporting framework aligns best with their business strategy and stakeholder expectations. Technology is becoming essential for efficient ESG reporting, helping businesses remain flexible as regulations shift.

For a deeper dive into the full impact of the Omnibus Proposal and detailed insights on how businesses are adapting, read the full Coolset 2025 Market Pulse Report. It covers key findings, stakeholder expectations, and how technology is shaping the future of ESG reporting.

How Coolset can help

At Coolset, we support businesses navigating ESG reporting — whether continuing with CSRD, transitioning to VSME, or exploring other frameworks. Our platform automates ESG reporting, streamlines workflows, and ensures compliance flexibility so businesses can focus on long-term sustainability.

Want to see how it works? Set up a call today and stay ahead in ESG reporting.