Processing of the Omnibus I Proposal on Corporate Sustainability Regulation in Finland

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The Omnibus I Directive proposal has progressed in the EU and Finland. As noted in the first part of this blog post, the Council of the European Union has given its final approval to the “Stop-the-clock” directive, which postpones the reporting obligations under the Corporate Sustainability Reporting Directive (CSRD) and extends the deadline for the national transposition of the Corporate Sustainability Due Diligence Directive (CS3D) to the year 2028. The Stop-the-clock directive was published in the Official Journal of the European Union on 16 April 2025 and entered into force on 17 April 2025. The Directive must be transposed into national legislation no later than 31 December 2025. On 15 April 2025, the Ministry of Economic Affairs and Employment also issued a draft government bill concerning the deferral of the reporting obligations under the CSRD.

The Stop-the-clock directive was enacted to ensure sufficient time for the negotiation at EU level of the more substantive amendments included in the Omnibus I proposal to the CSRD, the CS3D, and other related legislation, as the CSRD has already been transposed into national law. The timeline for processing these more extensive amendments at the EU level remains uncertain.

In addition, on 24 April 2025, the Ministry of Economic Affairs and Employment submitted the U-communication U 13/2025 vp to Parliament concerning the Omnibus I proposal. The U-communication addresses the content of the Omnibus I proposal, its effects, and the position of the Government on the proposal. A U-communication is a document through which the Government submits to Parliament for consideration a matter to be decided at the European Union level that falls within Parliament’s competence.

Draft Government Bill on the Possibility to Postpone the Application of Chapter 7 of the Accounting Act

On 15 April 2025, the Ministry of Economic Affairs and Employment published a draft government bill (project number TEM039:00/2025), proposing the postponement of the application of the provisions in Chapter 7 of the Accounting Act concerning sustainability reporting, in accordance with the Stop-the-clock directive. The draft proposes a phased postponement of the commencement of reporting. However, the draft does not apply to companies that will publish their sustainability report for the year 2024 during the current year (i.e. companies included in the first wave: those with a turnover of at least EUR 50 million or a balance sheet total exceeding EUR 25 million and employing more than 500 people).

Government´s U-communication U 13/2025 vp

According to the U-communication, the Government generally supports the proposed amendments under the Omnibus I proposal to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CS3D), and the Carbon Border Adjustment Mechanism (CBAM) Regulation. The proposal would substantially reduce the administrative burden on small and medium-sized enterprises, which the Government considers favourable.

The Omnibus I proposal also aims to simplify the European Sustainability Reporting Standards (ESRS), which form the basis for actual sustainability reporting.

Corporate Sustainability Reporting Directive (CSRD)

The U-communication states that the narrowing of the scope of application of the CSRD in accordance with the Omnibus I proposal would reduce the number of companies subject to sustainability reporting obligations in Finland. Initially, approximately 1,300 companies in Finland were expected to be subject to the CSRD reporting obligations; if the Omnibus I proposal is adopted, this number would decrease to only one tenth of the original estimate – around 130 companies.

According to the U-communication, a decline in the availability of sustainability-related information could impact the financial sector’s ability to assess risks, and thereby indirectly affect financial stability. The information required under the CSRD is essential for financial sector entities to fulfil their own obligations under the CSRD and other EU regulations. Where the CSRD is amended, financial undertakings would need to obtain the required sustainability-related information by other means. This would create costs and uncertainty, not only for the companies providing the information, but also for the financial institutions’ clients in meeting those institutions’ information requirements. According to the Finnish Government, the Commission has not sufficiently clarified how the allocation of capital flows to sustainable investments can be safeguarded in line with the EU Green Deal, if access to companies’ sustainability-related information is weakened.

According to the U-communication, the Government supports narrowing the scope of the CSRD but emphasises that the information needs of financial market participants must be taken into account in order to guide capital flows toward sustainable investments within the EU. Furthermore, the Government supports the simplification of the ESRS and the removal of sector-specific standards. The U-communication also states that encouraging voluntary reporting is a positive development and that voluntary reporting standards should be harmonised.

Corporate Sustainability Due Diligence Directive (CS3D)

The U-communication states that the proposed amendment, which would restrict the level of identification of adverse impacts primarily to the company itself, its subsidiaries and immediate business partners, could in practice undermine the ability to identify, prevent, and halt adverse environmental and human‑rights impacts—even though the company must require direct business partners to commit to enforcing compliance with the company’s code of conduct by imposing corresponding commitments on their own partners.

The Finnish Government considers it reasonably certain that the proposed amendments would impair the achievement of the Corporate Sustainability Due Diligence Directive’s original objectives and thus reduce the effectiveness of the regulation, since risks most commonly occur further down the value chain beyond the first tier. Nonetheless, narrowing the scope of application would significantly alleviate administrative burdens – especially for SMEs. The U‑communication further notes that limiting the assessment of adverse impacts primarily to direct business partners disproportionately reduces companies’ due diligence obligations, particularly in third countries. In negotiations on amendments to the Directive, it would therefore be necessary to reduce regulatory ambiguity concerning when the obligation to identify impacts extends beyond first‑tier business partners. This refers to situations where the company has credible information indicating that adverse impacts have occurred – or may occur – in the operations of indirect business partners.

As noted in the first part of the blog post, the Omnibus I proposal contains an amendment whereby, contrary to the original proposal, companies would not be required under the Directive to terminate a business relationship as a last resort once all other due diligence measures have been exhausted, and the adverse impacts cannot be eliminated. However, according to the Government, companies should still terminate a business relationship if the adverse impacts cannot be eliminated through other measures, as companies are still expected to act in accordance with their due diligence obligations.

According to the Government, the regulation of liability for damages under Finnish law broadly corresponds to the current directive, and therefore the proposed amendments would not have any significant impact on damages claims handled in Finland under the Directive. The Government considers that the civil liability of companies should be examined as part of the overall negotiation package of the proposal, and that the proposed regulation should ensure that the parties to a damages case have access to adequate legal remedies. The Government in principle welcomes the removal of the provision on the minimum level of the maximum amount of the administrative fine from the Directive, as it would harmonise supervisory practices at the EU level and improve the legal protection of companies.

According to the Commission, the proposed amendments could yield total recurring annual savings of approximately EUR 320 million for all companies within the scope, and around EUR 60 million in start‑up costs. The Ministry of Economic Affairs and Employment has estimated that a large company could face one‑off costs of approximately EUR 390,000–460,000 and recurring annual costs of EUR 220,000–290,000 under the Corporate Sustainability Due Diligence Directive, depending on the number of subcontractors. The Government’s conservative estimate suggests that the proposal could reduce these costs for Finnish companies by approximately one quarter.

In principle, the proposed regulation would relieve the burden on Finnish companies, as the processes required by the regulation would be simplified and measures would only be required at the first tier of the value chain. On the other hand, the regulation would still require the existence of core due diligence processes, monitoring across the full value chain, and the continuous evaluation of the effectiveness of the company’s own measures. Consequently, compliance with the due diligence obligation is becoming increasingly important for companies within the scope of application.

It should be noted that the continuously evolving regulatory environment under the Corporate Sustainability Due Diligence Directive creates uncertainty for companies and undermines confidence in the operating environment. According to the Government, the proposed regulation includes ambiguities, which may weaken legal certainty. Furthermore, the tension between voluntary standards and legislation may increase the uncertainty experienced by companies and the ambiguity of the regulatory framework, as companies are required to demonstrate compliance with regulations while investors and consumers may demand more extensive risk- and impact-based due diligence.

Carbon Border Adjustment Mechanism (CBAM)

The Carbon Border Adjustment Mechanism (CBAM) is an instrument of the EU’s climate policy that has a particular impact on the competitiveness of companies and industrial policy. The aim of the mechanism is to ensure that the prices of imported products into the EU better reflect their embedded emissions, thereby encouraging foreign producers and importers within the EU to reduce their emissions.

The Commission’s proposal concerning CBAM would amend the EU CBAM Regulation in a limited scope. The amendments aim to simplify and enhance the implementation of the Regulation. The Commission proposes a targeted amendment to clarify implementation. According to the proposal, the CBAM import threshold would be set at 50 tons of mass per importer per year, meaning that the threshold would be based cumulatively on the mass of imports. With the introduction of the new threshold, CBAM importers bringing in small consignments – such as SMEs – would be exempted from CBAM obligations. However, the threshold would not apply to imported electricity and hydrogen. Furthermore, in the third quarter of 2025, the Commission will present a comprehensive review report on CBAM, assessing the extension of the mechanism to new sectors covered by the emissions trading system and the inclusion of downstream products in the scope of the regulation.

According to the Finnish Customs’ assessment, the new CBAM import threshold would eliminate CBAM obligations for 92 percent of current CBAM-obligated parties in Finland, while 99% of CBAM import emissions would remain within the scope of the mechanism. The Finnish Government considers the simplification of CBAM justified and is of the view that appropriate and consistent implementation will help to achieve the objectives of the mechanism.

 

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