On 26th of February 2025, the European Commission issued the omnibus proposal to simplify sustainability reporting obligations. For the CSRD, EU Taxonomy and CSDDD, changes have been proposed which will have consequences for many companies. The reactions from wave 2 companies that have been preparing for the CSRD vary; from being annoyed for unnecessarily having invested time and energy to relieved that there is more time to adequately prepare for all the disclosure requirements.
In this 3-part series we summarize the main proposed changes from the Omnibus and share our view on how to take these to your advantage. First up are the proposed changes to the CSRD.
Proposed changes in a nutshell
The omnibus focusses on proposing changes to CSRD regulation as a response to the request to lower its administrative burden. The main proposed changes are the following:
- Reporting will be postponed with two years for companies from wave 2 onwards. This means that the earliest group no longer has to report in 2026 about financial year 2025, but instead should report in 2028 over 2027.
- The threshold for companies to fall under the CSRD is increased to 1,000 employees. Next to this requirement, an undertaking has to have at least 50 million euro in turnover and/or a 25 million euro on its balance sheet.
- The disclosures that require companies to get information from their value chain, are limited to reduce the data requests from smaller companies. By extending the so called value chain cap that was already in place for small and medium enterprises, it hopes to lesson the pressure from value chain partners on smaller companies who now no longer have to report under the CSRD.
- The sector-specific standards that still had to be developed, are retracted and will no longer be used to supplement the first set of ESRS that companies are using currently.
- The CSRD report will only be required to have limited assurance and the rule to increase this to reasonable assurance is removed.
New standards in the making
On top of these suggested changes to the regulation, the Omnibus proposal requests changes to the reporting standards as we know and use today. Firstly, it proposes a simplification of the first set of ESRS for companies reporting under the CSRD. With more focus on the quantitative disclosures like metrics, simplification of the double materiality principle and clearer language, it hopes to make the current standards more manageable.
Secondly, the omnibus suggests the development of a voluntary standard for those companies that no longer are obliged to report under the CSRD (i.e. companies not meeting the 1,000 employee theshold). This standard should be based on the current VSME (voluntary reporting standards for small and medium enterprises) and would include more proportional standards for these organizations.
Continue the course
Many companies will not meet the 1,000+ threshold and will no longer be obliged to report according the CSRD. Does this mean that they can stop their preparation? We don’t think it is wise to completely stop all efforts as sustainability remains an important topic on the agenda of many stakeholders. To stay a relevant business partner, you want to profile yourself and share sufficient information to attract and retain your investors or customers.
Our advice to these companies is to determine the key points of their sustainability strategy; which topics are important to position your company and to set yourself apart from competition? These are the topics that you still want to report on. To do this in a coherent and transparent way, the voluntary standard will be your guide.
Time for quality
The large companies (with 1,000+ employees) will still have to comply with the mandatory sustainability reporting requirements, but only as 2028. In fact they have two more years to prepare for it. Time they now can use to adequately address the gaps they may have identified to meet all the disclosure requirements; policies to be formalized, action plans to coherently put together targets to be defined. Many companies still have some homework to do if they want to fulfill all CSRD disclosure requirements.
The EFRAG will still review ESRS reporting requirements and the expectation is that especially the requirement for the narratives will be simplified and reduced. Therefore, our advice is to focus on the data needed to report the required metrics and use your policies, actionplans and targets in a a logical way to explain to stakeholders how you structurally manage the most important sustainability topics.
Navigating uncertainty
Whether the Omnibus is a blessing or a curse for your organization, one thing is for certain: it brings uncertainty to us all. In these unsettled times we suggest starting the conversation, whether it is on the work floor or with partners. Make sure to stay up to date and include different perspectives in your choices moving forward.
Are you interested to see how we can help you in this conversation? Drop a line!
