The EU Omnibus ‘Simplification’ Agenda: What’s Next?

As we enter 2026, the EU Omnibus ‘Simplification’ programme remains a dominant theme. While CSRD (Corporate Sustainability Reporting Directive) and CSDDD (Corporate Sustainability Due Diligence Directive) have reached a degree of stability, the broader simplification agenda—spanning environmental law, agriculture, and industry—is only beginning.

Originally introduced as a pragmatic effort to streamline regulation and bolster Europe’s competitiveness, the initiative has evolved into a multi-track legislative push touching sustainability reporting, digital rules, capital markets, agriculture, and supply-chain governance. While political momentum now favours simplification, climate and nature remain core risks and supervisory priorities. From January, these priorities will extend to include social and governance factors under the latest EBA ESG guidelines. And this is not just a banking issue - it is systemic. As one Allianz board member starkly noted: “If insurance is no longer available … no more mortgages … the financial sector as we know it ceases to function … capitalism as we know it ceases to be viable.”

Implications for Financial Services

The impact on financial services will be significant. The final shape of these reforms will influence capital flows, reshape client engagement, and alter reporting frameworks and operating models. Divergence between regulators, the EU Commission, and national governments will almost certainly lead to fragmentation and a challenging transition.

A Shift in Europe’s Regulatory Compass

Europe is operating in a fundamentally different context than even two years ago. Global competition is intensifying. European business faces rising costs, while demands on public finances—particularly for defence and energy security—continue to grow.

Against this backdrop, EU institutions have placed competitiveness and growth at the centre of policy. The Omnibus agenda reflects this shift, aiming to cut red tape by 25%, saving businesses an estimated €37.5bn annually. It seeks to adjust regulations to exclude all but the largest firms, reduce administrative burden, streamline reporting, and improve coherence across sectors—freeing capacity for investment and innovation.

What Has Changed?

• CSRD will now apply to firms with 1,000 employees and €450m turnover, removing roughly 90% of companies from scope (from ~50,000 to 4,600). For those remaining, reporting requirements have been reduced by around 60% in terms of data point disclosures. The directive also introduces ‘protected undertakings’ and exemptions for ‘financial holding undertakings’.
• CSDDD will now apply to firms with 5,000 employees and €1.5bn global turnover (approximately 70% of companies descoped). Transition plans have been removed from the text, and civil liability is capped at 3% of worldwide turnover.

While these changes will be welcomed by many, particularly smaller firms, they also exclude entire sectors—including financial services firms managing billions in capital but operating with modest staff numbers. This raises a strategic question: report voluntarily or remain silent? Boards will need to weigh this against commitments, geographic footprint, and stakeholder expectations.

The Hidden Challenge

Information requests will persist. In Q4 2025, I spent considerable time helping financial institutions redefine risk-based information requirements now that CSRD’s ‘golden source’ has largely disappeared. Many businesses will face multiple requests on similar themes, adding cost and complexity—particularly when seeking access to finance or considering sustainable targets for green or transitional funding.

A High-Stakes Bet

Will simplification deliver the promised investment and innovation—or prolong the status quo as global competition accelerates? Consider the proposed rollback of the EU’s 2035 combustion engine ban. Will this make European carmakers more competitive, given EVs now account for one in four global car sales and are projected to reach 40% by 2030? With China leading in EV technology and advancing 1,000km battery capability, how will Europe respond?

On energy transition, progress is welcome but uneven. Renewable electricity generation varies widely (Denmark 90%+, Portugal 70%+, Ireland 40%+). Rising demand—driven by AI and electrification—requires significant grid and capacity upgrades if Europe is to deliver on the Draghi report’s dual digital-green transition. Cost pressures remain acute; for context, Australia will offer three hours of free electricity daily from July. A recent Oxford Martin report estimates a fast energy transition versus the current fossil fuel system could generate a net present saving of roughly $12 trillion globally. The case for accelerating transition is clear.

Europe’s New Approach

Where the Commission once led with ambitious regulatory expansion through predictable consensus, it now operates through new alliances, realigning growth ambitions with economic realities. This recalibration will define the effectiveness—and relevance - of EU institutions globally and with member states.

For business leaders, this creates a delicate balancing act: understanding the political impetus behind reforms while seizing opportunities for long-term sustainable growth. Financial services must anticipate where policy rollback may occur, and which regulations are here to stay - factors that directly influence capital flows. This is alongside the core responsibility of funding and underwriting the real economy and accelerating climate transition, while delivering acceptable risk-adjusted returns.

Europe’s evolving stance also presents an opportunity: to engage with EU institutions and shape initiatives such as Capital Markets Union, digital assets, and harmonised rule sets for retail and SME customers—where costs and barriers to entry remain high.

This article is the view of the author(s) and does not necessarily reflect IoD Ireland’s policy or position.

About the Author

Sean MacHale is Partner and Head of Financial Services Climate Change & Sustainability Services (CCaSS) at EY in Ireland, where he advises institutional clients on strategy, decarbonisation and sustainable finance. He is also an Adjunct Professor at Trinity College Dublin, lecturing on sustainability, governance and the intersection of finance and climate risk. Previously, Sean served on the Advisory Board for Prince Sultan University’s Centre for Sustainability and Climate in Riyadh.

From 2019 to 2022, Sean was Head of Institutional Strategy, Sustainability and Growth at Bank of Ireland, shaping ESG integration and product development across the institutional portfolio. Before that, he was Executive Director and Head of the Financial Institutions Group for the UK & Ireland at Danske Bank, with end‑to‑end responsibility for credit, product delivery and risk, and led strategies spanning transactional banking, custody, depositary and DCM origination—including senior, covered and green issuance. Earlier, as Head of Global Markets (Ireland) at HSBC, he built the institutional and corporate client base from four to 140, funded a multibillion loan book, and delivered cross‑asset risk solutions.

Sean began his career in trading and risk advisory roles at Barclays Capital and Bank of Ireland Corporate & Treasury, and has guest‑lectured at DCU on hedging strategies and portfolio optimisation. He holds the Certified Bank Director qualification from University College Dublin (2015).