What does the EU Sustainability Omnibus mean for Real Estate?
The European Commission has introduced the Sustainability Omnibus package, aimed at reducing the reporting burden for businesses by modifying the EU’s sustainability disclosure requirements. The proposal intends to free up resources for companies, particularly small and mid-sized enterprises, allowing them to focus on practical sustainability measures such as energy efficiency. However, the requirements for larger corporations, defined as those with more than 1,000 employees and meeting certain financial thresholds, remain unchanged. As a result, only about 20% of companies will continue to be subject to the previous Corporate Sustainability Reporting Directive (CSRD).
Over the past few years, the EU has implemented several directives to improve corporate transparency and accelerate progress toward sustainability targets. These measures support the EU Green Deal, align with global climate agreements, and aim to provide investors and consumers with better insights into corporate environmental and social impacts. However, concerns have emerged about the burden placed on smaller businesses. The Draghi report on EU competitiveness highlighted that the extensive reporting obligations could limit the ability of small and mid-cap firms to compete globally. In response, the Omnibus proposal seeks to balance regulatory oversight with economic competitiveness. The European Commission estimates that the revised requirements will save businesses approximately €6.3 billion annually, in addition to reducing the initial costs associated with setting up reporting systems.
For investors and property occupiers, access to reliable sustainability data remains critical for managing risk and ensuring responsible business operations. While some companies will be exempt from certain reporting obligations, the principles of environmental performance, social responsibility, and corporate governance remain relevant. The changes also provide a temporary reprieve for businesses that have yet to comply with the CSRD, as they now have additional time before meeting the full requirements. However, companies that have already submitted CSRD reports must continue their disclosures.
The implementation timeline for the Corporate Sustainability Due Diligence Directive (CSDDD) has also been adjusted, with compliance for large companies now required by 2028 instead of 2027. In the meantime, businesses must continue to adhere to national regulations, as many EU Member States have already incorporated sustainability reporting obligations into their legal frameworks.
Despite the changes, the fundamental concept of double materiality—assessing both the impact of a company’s activities on the environment and the financial risks posed by sustainability factors—remains intact. Companies and their business partners are encouraged to continue materiality assessments as part of best practices for long-term value creation. Businesses that have already undertaken such assessments have gained insights into the financial risks and opportunities associated with sustainability issues, which can enhance investor confidence and improve resilience in an evolving regulatory landscape.
The Omnibus proposal also includes revisions to the European Sustainability Reporting Standards (ESRS), aiming to simplify data collection by reducing the number of required metrics and qualitative disclosures. Real estate investors and occupiers, who rely on these disclosures to optimize operations and manage risks, may need to reassess how they leverage existing data collection efforts. Companies within the scope of the CSDDD will now be required to conduct due diligence primarily for direct suppliers unless specific risks exist deeper in the supply chain. Additionally, supply chain due diligence updates will be required every five years rather than annually.
Businesses that are no longer subject to CSRD requirements may consider adopting the voluntary SME reporting standard recommended in the Omnibus proposal. This approach allows companies to manage sustainability information requests from partners while limiting the scope of disclosures.
The changes also have implications for access to green finance. Many financial institutions use the EU Taxonomy as a benchmark for sustainable loans and investments. While the Omnibus simplifies reporting, further reviews of technical screening criteria are expected. Aligning real estate assets and investment funds with the updated EU Taxonomy could still support sustainable investment strategies, even on a voluntary basis.
The proposed changes must be approved by the European Parliament and the European Council, a process that may take months or years. Once adopted, Member States will have one year to incorporate the new directive into national legislation.
CBRE continues to work with real estate investors and occupiers to navigate regulatory changes and prepare for compliance. Effective data management has been instrumental in helping businesses adjust to evolving requirements. While the Omnibus proposal simplifies ESG reporting, industry leaders emphasize the importance of maintaining a strategic approach to sustainability. According to Stefani Papadaki, Head of ESG & Sustainability Solutions at CBRE Denmark, shifting from a compliance-based mindset to a broader understanding of ESG risks and opportunities can help companies make informed decisions that drive commercial benefits. Although reporting requirements have been reduced, sustainability remains essential for transparency, risk management, and investor confidence.
Author: Stefani Papadaki Head of ESG & Sustainability Solutions, CBRE Denmark.
