Beyond the EU Omnibus Chaos: Why a Strong Traceability Core Matters More Than Any New Regulation

By Inspectorio’s Center of Excellence in Sustainability & Traceability

On February 26th, 2025, the European Commission published the Omnibus Simplification Package, proposing to streamline and reduce administrative burdens across sustainability and corporate-reporting laws including CSRD, CSDDD, CBAM, and the EU Taxonomy.

The European Parliament has since voted to expand these simplification measures beyond the Commission’s original proposal. Compared to earlier proposals, the Parliament is now choosing to back an even narrower sustainability framework, raising thresholds, removing several requirements, and scaling back due diligence obligations. What was originally presented as an administrative tidy-up quickly turned into a significant reshaping of who must report, what must be disclosed, and how far companies are expected to investigate their supply chains.

While these changes reduce mandatory reporting requirements for many companies, they also shift how organizations approach supply chain transparency and compliance. Key Changes in the Omnibus Package

The biggest shift we have seen in the proposal is the scope of the CSRD, CSDDD, and other ESG-related regulations. Parliament’s latest proposal dramatically narrows the number of companies covered by major sustainability laws. CSRD now applies only to very large companies, with thresholds raised to 1,750 employees and €450 million in revenue. CSDDD goes even further, covering only multinationals with 5,000 employees and €1.5 billion in revenue. In practice, this removes the vast majority of mid-market firms and listed SMEs from mandatory reporting.

Omnibus also introduces new protections for smaller suppliers, limiting how much sustainability information can be requested by larger customers. It also requires companies in scope to rely on existing information first, rather than sending wide-ranging questionnaires across the value chain. Several requirements, including mandatory climate transition plans, have been removed from the CSDDD. Additionally, due-diligence monitoring cycles have been reduced, sector-specific standards have been postponed, and liability moves towards national-level enforcement. Lastly, timelines have been pushed back 1-2 years, assurance remains limited, and disclosures shift towards more prioritized topics, with fewer mandatory indicators to report.

The package reduces administrative burden while maintaining focus on traceability, product-level evidence, and border-level compliance requirements.

Implications for Companies

The changes create different compliance landscapes for companies of various sizes. For smaller and mid-sized companies, the changes offer some breathing room. Falling below the new CSRD and CSDDD thresholds means no mandatory sustainability reports and no formal due diligence program. Many SMEs will face far less paperwork than before. However, even without legal obligations, the commercial ones remain. Retailers, global brands, financial institutions, and marketplace partners will continue demanding traceability, emissions data, chemical safety information, and assurance that products comply with a growing set of product-level rules. Legal relief does not eliminate market pressure, and expectations from customers often move faster than regulation itself.

For large companies still in scope, the dynamic is almost the reverse. The Omnibus Package requires them to rely on existing information first, limiting their ability to push data requirements down the supply chain. That means these companies must strengthen their own internal systems for gathering, validating, and managing supply chain evidence. With mandatory climate transition plans removed and due diligence cycles reduced, they have more flexibility on how they structure their programs, but they also carry greater responsibility to show that credible, defensible data backs their decisions. Reporting may be simplified, but demonstrating compliance becomes more continuous and evidence-driven.

Across the value chain, compliance is increasingly focused on continuous, evidence-based verification rather than periodic reporting exercises. Border enforcement for deforestation, forced labor, chemicals, and product-level compliance is accelerating. Tariff exposure and origin verification are becoming everyday operational concerns. And as regulations evolve, customers will expect more transparency, not less.

The Role of Inspectorio as Supply Chain Data Infrastructure

Despite reduced reporting requirements, companies still need robust supply chain data infrastructure. As regulatory frameworks evolve, organizations benefit from systems that can adapt to multiple compliance requirements without requiring complete process overhauls.

Companies are increasingly building a strong, integrated data foundation. That means bringing together materials information, certifications, lab tests, traceability, production data, and supplier performance into a single, consistent environment. When this foundation exists, new regulations stop becoming “new projects.” Each requirement is simply another data point captured within an already-structured system.

No fire drills. No chasing suppliers for documents that already exist. No rebuilding processes every time the EU updates a threshold.

This shift also strengthens supplier relationships. When everyone is working from the same verified information, suppliers aren’t being hit with redundant or conflicting requests — especially important now that the Omnibus protects SMEs from excessive data demands. Trust improves, collaboration becomes easier, and compliance moves faster because it’s based on shared evidence rather than fragmented back-and-forth exchanges.

Technology platforms can facilitate this approach, and this is where Inspectorio fits.  Inspectorio’s platform connects quality, compliance, sustainability, traceability, and production data, using AI to automate document classification, verification, risk assessment, and supplier management. Instead of spending hours hunting through inboxes or reconciling spreadsheets, teams can focus on addressing real risks and making strategic decisions. Since Inspectorio connects quality, compliance, sustainability, traceability, and production flows in one place, companies gain the visibility and intelligence they need no matter which regulation comes next.

Integrated data infrastructure can help companies respond more effectively to evolving regulatory requirements. Companies can respond to market expectations more confidently, adapt to regulatory changes more quickly, and build the kind of transparency that partners, auditors, and consumers increasingly expect.  As regulations continue to evolve, companies with strong data foundations are better positioned to adapt to new compliance requirements.

Interested in discussing how these regulatory changes affect your supply chain operations? Schedule a conversation with our compliance and sustainability experts at inspectorio.com.