The EU Omnibus
On February 26, 2025, the European Commission published its Omnibus draft to simplify the sustainability reporting rules. It proposes several changes to the Corporate Sustainability Reporting Directive (CSRD), the EU Taxonomy, the Corporate Sustainability Due Diligence Directive (CSDDD) and the Carbon Border Adjustment Mechanism (CBAM). The aim is to reduce reporting obligations by 25% for large companies and by 35% for small and medium-sized enterprises (SMEs).
The key proposed changes at a glance
CSRD
- Only companies with more than 1,000 employees and either more than €50 million in turnover or more than €25 million in total assets are to fall under the CSRD, regardless of their legal form. In concrete terms, this would mean:
- No change to the timeline for companies that currently fall under the Non-Financial Reporting Directive (NFRD) and have more than 1,000 employees.
- For all other companies with more than 1,000 employees, the first reporting year would be postponed by two years to fiscal year 2027.
- For companies with 1,000 employees or fewer, the CSRD reporting obligation is to be dropped. This includes capital market-oriented SMEs.
- Companies from non-EU countries are only to report if they generate more than €450 million in turnover in the EU or have a subsidiary or branch with more than €50 million in turnover in an EU member state.
- All other companies are recommended to report under a voluntary reporting standard to be based on the VSME. Suppliers of companies that fall under the CSRD may at most be asked for information in line with these voluntary standards.
- Auditors are only to perform a limited assurance engagement. A potential extension of the audit requirement to reasonable assurance is to be dropped. Instead, specific guidelines for auditors are to be published in 2026.
- In addition, the sector-specific standards are to be dropped and the number of European Sustainability Reporting Standards (ESRS) datapoints is to be revised once again. However, the double materiality assessment is to remain the basis of reporting.
EU Taxonomy
- The reporting obligation is to be limited to companies with more than 1,000 employees and more than €450 million in turnover.
- For companies with more than 1,000 employees but less than €450 million in turnover, reporting under the EU Taxonomy is to become voluntary.
- Determining the Taxonomy-aligned share of turnover and CapEx is sufficient. Determining the Taxonomy-aligned share of OpEx is to become voluntary.
- Companies can also disclose that only parts of the technical screening criteria (TSC) have been met, to show that they are on the way to Taxonomy alignment.
- The reporting templates and DNSH (Do No Significant Harm) criteria are to be simplified.
CSDDD
- The deadline for transposing the CSDDD into national law is to be postponed to mid-2027. Application for companies with more than 5,000 employees is therefore also postponed by one year to fiscal year 2028.
- The due diligence obligation is to be limited to direct suppliers (Tier 1). The regular repetition of supplier assessments is to be extended from every year to every five years.
- To keep the reporting burden manageable for suppliers with fewer than 500 employees, information requests may at most cover the disclosures from the VSME.
CBAM
- CBAM reporting is to be limited to importers of more than 50 tonnes of imported goods per year.
Next steps in the parliamentary process
The proposals will now be discussed and must be adopted both by a simple majority in the European Parliament and by a 55% majority in the Council of the EU (i.e. 15 of the 27 member states). These member states must represent 65% of the EU population. A decision is targeted for mid-year. The new regulation must then be transposed into national law, for which the proposal provides a 12-month deadline.
