The Omnibus Directive brings extensive changes to CSRD reporting

On 26 February 2025 the European Commission introduced the Omnibus Directive (Omnibus Simplification Package), which, among other things, is intended to simplify the sustainability reporting requirements under the Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy. The Directive aims to narrow the scope of businesses subject to mandatory reporting, reduce the amount of information required and postpone the first reporting obligation by two years for companies that should start reporting in 2025.

The introduction and the subsequent implementation of ESG reporting constitutes a complex process that requires the involvement of company management as well as the rank-and-file employees while changing existing company processes and requiring the introduction of entirely new ones. In combination with the ever-changing market conditions, other regulations and global and regional developments in recent years, this has unfortunately led to generally negative sentiment towards ESG, even though many companies approach sustainability quite responsibly even without the “threat” of reporting. The package should reduce the administrative burden for companies by at least 25% and by up to 35% for SMEs.

What key changes you should expect?

Introduction of New Limits for Reporting Obligation

Now, reporting will be mandatory only for large companies with at least 1,000 employees and which meet one of the following conditions:

• Turnover of EUR 50 million, or
• Balance sheet in the amount of EUR 25 million.

Businesses below these thresholds and publicly traded SMEs will no longer be subject to the obligation under the CSRD.

Deferral of Reporting Obligation

The proposal also includes a deferral of the obligation to prepare an official ESG report by two years for companies that were obligated to report as of 2026 (based on data for 2025). Therefore, the first report is to be prepared in 2028, using data for 2027. According to the latest information, the deferral of the obligation should be submitted for discussion and approval by the European Parliament as soon as possible. No specific transitional rules are mentioned in the proposal for companies that were supposed to report under the CSRD in 2025 for 2024.

Reduction of Scope of Reported Information

The European Sustainability Reporting Standards (ESRS), which determine the content of sustainability reports, are to be revised within six months of the entry of the Directive into force. The main objective is to reduce the number of topics and information required to be reported by the companies. At the same time, no additional sector-specific reporting standards will be introduced.

Simplification of EU Taxonomy Requirements

The obligation to follow the EU Taxonomy will now only apply to companies subject to the CSRD (i.e. large companies with more than 1,000 employees) with a turnover of more than EUR 450 million. Companies that are subject to the CSRD but have a turnover of less than EUR 450 million will have the option of voluntary reporting (“opt-in” regime). The EU Taxonomy as a whole will be simplified under separate proposals for revision of the rules.

Audit Obligations

The EU will no longer develop its own standards for the sustainability reporting audits. In the future, the introduction of audits with “reasonable assurance” is not planned. Only the mandatory audits with “limited assurance”, which are already included under the CSRD, will remain.

What other regulations will be affected, and what will follow?

Aside from the changes to sustainability reporting, the Omnibus Directive also includes changes to the Corporate Sustainability Due Diligence Directive (CSDDD) and the Carbon Border Adjustment Mechanism (CBAM). The draft Directive will now be submitted to the European Parliament and the Council. The changes will only enter into force once an agreement has been reached between these institutions and after their publication in the Official Journal of the EU.

Member States will have to translate the two-year delay of the first report into national legislation by the end of 2025. The content adjustments within the CSRD will then have to be implemented within 12 months of the entry of the Directive into force.

However, some things remain uncertain…

The changes proposed by the Commission should bring relief, in particular, to medium-sized enterprises, which would otherwise be subject to the CSRD as of this year. However, it is still uncertain whether the proposals will pass without amendments, as both the European Parliament and the Council may require changes during the negotiations. If this issue concerns you, we recommend that you consider transforming your present preparations for the CSRD into voluntary reporting that will give you a competitive advantage. At the same time, you will avoid the potential risk of last-minute reporting if the proposal is not approved.

Naturally, we will continue to monitor the situation closely and will keep you informed of any new developments. If you have any questions or are interested in consulting on ESG or other issues, please do not hesitate to contact us.