European Union Omnibus proposal and its implications on tenants.

In February 2025, the European Commission introduced the Omnibus Proposal, a comprehensive legislative package designed to streamline and simplify the European Union's sustainability reporting framework. It has proposed changes regarding the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

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This initiative aims to strike a balance between the EU's ambitious environmental goals and the need to reduce administrative burdens on companies, thereby enhancing competitiveness while upholding the integrity of sustainability objectives.

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But the reaction to this proposal has been mixed. Actually, not mixed, but largely negative. Because it essentially changes the threshold, which means many companies won’t be required to report. Less reporting sounds nice, but ultimately it’s simply a delay, and there are concerns it will weaken transparency and curb green ambitions.

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But where do tenants and real estate come into all of this? Well, real estate companies or investment firms that invest in them, as well as the tenants who lease the assets, may be indirectly impacted. 

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Under the current CSRD requirements, companies in the EU with significant real estate assets that generate rental income might need to report their environmental impact. But with the Omnibus proposal, that might change. Let’s dig deeper! 

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What is the EU Omnibus proposal?

The Omnibus Proposal is a legislative proposal by the European Commission that aims to make amendments to several key sustainability regulations, including: 

• Corporate Sustainability Reporting Directive (CSRD): Proposes raising the reporting threshold to companies with over 1,000 employees and either a turnover above €50 million or a balance sheet total above €25 million
• Corporate Sustainability Due Diligence Directive (CSDDD): Suggests limiting due diligence obligations to direct business partners, unless there is a known risk deeper in the supply chain
• EU Taxonomy Regulation: Aims to simplify reporting requirements by reducing the number of data points and focusing on significant economic activity

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Additionally, the proposal includes a "stop-the-clock" directive, which delays the application of certain obligations under the CSRD and CSDDD, providing companies with more time to adapt.

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It’s estimated that the proposed changes to the CSRD threshold would result in approximately 80% of companies currently slated to start reporting being taken out of scope. Interestingly, the proposal also eliminates the reporting requirements for listed small and medium-sized enterprises (LSMEs), a category where some real estate companies may have potentially come in, as they have smaller workforces. 

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How will the Omnibus proposal impact the real estate sector?

The real estate sector, a significant contributor to the EU's energy consumption and greenhouse gas emissions, will experience several impacts as a result of the Omnibus proposal (should it be adopted):

• Reduced reporting obligations: Many real estate companies, particularly SMEs, may fall outside the scope of the revised CSRD. That will essentially alleviate the burden of extensive sustainability reporting 
• Focus on direct suppliers: With the CSDDD's emphasis on direct business partners, real estate firms can streamline their due diligence processes, concentrating on immediate suppliers and contractors 
• Simplified taxonomy reporting: The proposed changes to the EU Taxonomy Regulation will make it easier for real estate companies to assess and report on the sustainability of their economic activities (which might be a positive effect as it may encourage more firms to engage with sustainable finance opportunities) 

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In short, many real estate companies won’t need to report any environmental, social, and governance (ESG) data. Whether that’s a good thing or bad depends on the real estate companies. The elimination of mandatory reporting may be seen as relief, but the truth is that there are opportunities for growth in sustainability for this particular sector. Without solid ESG data, these companies might miss out on such opportunities. 

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What does it mean for tenants?

Neither CSRD in its current form nor the proposed form (Omnibus) directly impacts tenants. Tenants and their energy consumption constitute Scope 3 emissions for real estate companies leasing their portfolio properties. Now, with reporting out of the equation, these companies may no longer need tenants to report data. 

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That means tenants might not be required by their lessors to share their energy bills or adopt greener practices. Still, other directives might impact tenants' experience, as far as the energy efficiency of the residential or commercial properties they rent. 

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For instance, the EU Energy Performance Building Directive aims to turn all EU buildings zero-emission by 2050. This particular directive advocates for changes such as retrofitting and renovations for old buildings, minimum energy efficiency requirements, phasing out fossil fuels for heating and cooling, and data collection and sharing. 

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Tenants might still be required to share their energy consumption data in cases where only they have access to it and not the leasing company. On the flip side, tenant experience might improve given these sweeping changes required for old and new buildings. That means more energy-efficient housing and offices, which may reduce the operating/living costs for these tenants. 

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Implications for other real estate stakeholders

The Omnibus proposal acceptance and eventual passing by the European Parliament and Council could also have implications for other players in the real estate sector. Here are a few examples:

• Investors: Simplified and standardised reporting makes it easy to compare investments across different portfolios. However, if companies are not required to collect or report data, investors may not have access to such data readily available. However, they could still request ESG reports from real estate companies, which means they might still need to report on their portfolio performance in terms of environmental impact 
• Property managers: The reduced administrative burdens allow property managers to focus more on implementing sustainability initiatives rather than extensive reporting. In small companies, they might have been the ones responsible for collecting data from tenants 
• Developers: Developers and construction companies might find the lack of reporting requirements a relief. They might not need to spend resources on data collection, sorting, and reporting. That doesn’t necessarily mean that sustainability is out of the question, as investors and tenants might still only be interested in green projects. 

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Should you still be collecting tenant energy data?

The short answer: Absolutely. 

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Collecting tenant energy data remains important. For starters, the Omnibus proposal has yet to pass and be adopted. If it falls through, your real estate company may need to report ESG data, which would require reporting the energy consumption of your assets. 

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Even if, at present or when Omnibus passes, your company isn’t required to report, it may still be a good idea to collect tenant energy data. Why? Data collection enables landlords and property managers to monitor energy consumption patterns, identify inefficiencies, and implement targeted improvements to reduce costs. 

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Sustainability will remain a big theme in leasing, whether regulations stay tough or get softer. Green, energy-efficient properties have the potential to make your company more money by lowering costs and attracting eco-conscious tenants. 

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And you can’t make positive changes to those assets that result in energy efficiency without first getting data!

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Choose sustainability

For real estate companies or any firm with significant real estate holdings, the Omnibus package may seem like a relief (that is, if it means no more ESG reporting). However, the reality on the ground is that sustainability efforts are ultimately beneficial to the business in the long run. 

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According to one survey, the international market for green construction projects has grown significantly over the last 10 years, and demand for green building activity is poised to increase, potentially doubling in some regions.

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Even if your company isn’t technically required to collect and report sustainability data, you might still want to. With data, you can learn a lot about the environmental and, by extension, financial performance of your real estate assets.

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