Against a backdrop of geopolitical and economic uncertainty, the year 2025 will continue to be marked by various "Omnibus" proposals from the European Commission, particularly in the areas of sustainable finance and national defence, shifting the boundaries of sustainable finance. Legal column by Marie-Aude Noury, member of the Paris Bar, partner, Squair A.A.R.P.I.
On 26 February 2025, following the Draghi report highlighting the need to improve competitiveness and reduce the administrative burden on businesses, the European Commission launched a so-called Omnibus proposal to amend the main regulatory texts of the Green Pact. While Directive 2025/794 of 14 April 2025 ("Stop the clock ") postpones by two years the entry into force of the CSRD for the second and third waves of companies concerned, and by one year the deadline for transposing the CS3D, the substantive amendments concerning the CSRD and the CS3D should be discussed by Parliament in October with a view to a trialogue agreement by the end of the year.
From one Omnibus to another
One of the major changes in the CSRD concerns the raising of thresholds. In its February 2025 proposal, the Commission raised the employee threshold to 1,000. On 23 June, the Council retained the 1,000-employee threshold but raised the turnover threshold to €450 million. The Parliament's preliminary position envisaged raising the employee threshold to 3,000. Parliament is due to vote on this in mid-October.
Raising the thresholds in this way would exclude from the scope of the CSRD a large number of companies that are currently covered, and would have a significant impact on the ESG data available. The President of the ECB expressed her concern about this in a letter to the European Parliament dated 15 August 2025, stressing the risks to the stability of the European banking system in the event of a reduction in the availability of ESG data for assessing climate risk.
On 30 July, the European Commission published a recommendation on the voluntary sustainability information standard for small and medium-sized enterprises (VSME). Voluntary Standard for non-listed SMEs "), which should serve as a ceiling on the information that companies subject to the CSRD may request from their suppliers or other participants in the value chain. In other words, this standard should become a sustainability standard for companies outside the scope of the CSRD.
In addition, a delegated act of the Taxonomy was adopted in July 2025 with a view to lightening the mandatory reporting tables and allowing companies to no longer have to publish non-material information (with a materiality threshold of 10%) on turnover indicators, capex and opex.
EFRAG has opened the ESRS revision for consultation and should submit it to the European Commission by November 2025, with a massive simplification of the data points (reduction by two-thirds). A delegated regulation "Quick Fix of 11 July 2025 includes certain relaxations in ESRS reporting for companies in the first wave that are required to publish a sustainability report.
It should also be noted that the European Commission has put the revision of the SFDR regulation on its agenda for 19 November 2025.
The multiplicity of regulatory changes in sustainable finance introduced or in the process of being adopted in 2025 comes as a surprise at a time when the regulatory framework had just been completed with the adoption of the CS3D in May 2024 and the first sustainability reports issued by companies in the first wave under the CSRD in 2025. This regulatory instability is creating a great deal of uncertainty for stakeholders. While legal standards must naturally evolve in line with the facts, it is essential that they nevertheless meet the requirements of clarity, intelligibility and predictability. This is all the more important given that, in addition to changes in the text, there are also interpretative recommendations from the Commission on the Sustainable Finance Framework.
Sustainable finance in the national defence sector
Following on from the " White Paper for European Defence - Readiness 2030 ", On 17 June 2025, the European Commission published a package of simplification measures "Defense Readiness Omnibus" aimed at removing obstacles and administrative challenges facing the defence industry. Among the various measures proposed is Commission Opinion C (2025) 3800 on the application of the Sustainable Finance Framework and the Corporate Sustainability Due Diligence Directive to the defence sector. This opinion "to contribute to à warn any undue discrimination by the sector in the decisions investment and to ensure a better understanding and greater recognition of the sector's potential to contribute to the sustainabilitý social ". In it, the Commission sets out the application of the regulatory framework for sustainable finance to the defence sector.
In the Commission's view, the defence sector is not per se incompatible with sustainable finance. The Commission invites a case-by-case analysis. The Commission points out that the sustainable finance framework is sector-neutral, except in the case of controversial weapons. Thus, just because an investment concerns the defence sector does not mean that it cannot be sustainable.
The Commission recognises the defence sector as an essential contributor to the resilience and security of the European Union, in line with the objectives of the Union and the United Nations, and hence to peace and social sustainability.
In this respect, the Commission encourages financial market participants not to consider defence as a de facto non-contributor in their assessment of sectors contributing positively to social sustainability, whether when taking into account negative impacts under the SFDR or sustainability preferences under MIFID. The Commission stresses that financial market participants may consider, on the basis of a case-by-case analysis, that defence activities that preserve peace and security contribute to the achievement of social objectives, provided that they do not significantly undermine other sustainability objectives and that they respect good governance practices.
The Commission points out that the CS3D covers the defence sector like any other sector, although due diligence does not extend to the activities of companies' downstream trading partners in relation to military and dual-use products where their export has been authorised by the authorities of the Member States. It also stresses that the CSRD allows companies not to disclose classified or sensitive information, even if this information is considered material. The Commission also points out that companies with defence-related activities can claim alignment with the Taxonomy for eligible horizontal activities (e.g. greening of buildings, infrastructure, clean transport), provided they meet the applicable requirements.
In this changing context, which could be a source of new opportunities, financial market players will nevertheless need to ensure that they have the necessary ESG information and carry out appropriate due diligence to ensure the sustainability of their investments.