On the 26th February 2025, the European Commission proposed an ‘Omnibus package” with adjustments to the Corporate Sustainability Reporting Directive (CSRD). These adjustments included a number of changes which aim to reduce the administrative and reporting burdens on companies as well as unlocking a business’s investment potential.
These decisions are not yet final as they need to be approved by the European Parliament and the Council of the European Union. The legislation needs European Parliament approval with the majority of MEPs voting in favour of these proposals, with at least 55% (15 of 27) of Member States voting in favour at the European Council. The adjustments will come into full force following its publication in the EU Official Journal.
In this blog, I’ll recap what CSRD is and what the new adjustments to the reporting directive look like.
Corporate Sustainability Reporting Directive (CSRD): A Recap
What Is CSRD?
CSRD is a new regulation which requires certain companies to disclose information about their environmental, social, and governance (ESG) performance. In doing so, the regulation aims to enhance transparency, accountability and engage stakeholders. CSRD requires companies to disclose their sustainability efforts across three main areas:
- How certain activities impact the climate and environment.
- The environmental risks and opportunities affecting their company.
- How sustainability and environmental challenges are managed.
CSRD ensures environmental compliance, aligning with ESG standards. Additionally, it:
- Demonstrates transparency to customers on the workings of your business.
- Shows shared values with customer and company values.
- Builds trust with stakeholders, builds a respectable reputation and provides accountability.
- An opportunity for companies to demonstrate their commitment to global issues.
Non-compliance with CSRD can result in various penalties for companies:
- Fines and sanctions.
- Legal liability for company directors.
- Reputational damage, leading to a lack of trust and transparency between partners and stakeholders.
New Changes To CSRD
There are two major changes which have been made under the new CSRD proposal.
Firstly, only companies with more than 1,000 employees with a revenue greater than €50 million net turnover or a balance sheet above £25 million would be included in the scope of the CSRD. This reduced scope removes an estimated 80% of companies from the regulation’s sustainability requirements. This new regulation focuses more on larger companies and their reporting.
Initially, with the first reports being issued in 2025, CSRD covered large companies meeting a balance sheet total of €25 million or more, a net turnover of €50 million or more, and an average number of at least 250 employees. Therefore, the new “Ombnibus package” significantly reduces the scope of companies required to comply with CSRD.
Secondly, on the 3rd April 2025, the Council of the European Union agreed on upholding the EU Commission’s proposal to delay the CSRD reporting timeline by two years (July 2027). The move will also extend the compliance deadline for companies already under the directive’s scope.
Companies in the EU with more than 5,000 employees and a net turnover higher than €1.5 billion, will now have until 2028 to comply, meanwhile small and medium-sized companies will be required to submit their sustainability reporting in 2029.
Additionally, the Commission also plans to reduce the frequency of monitoring the effectiveness of due diligence from annual to every 5 years.
What Are The Reasons For These Changes?
Essentially, the EU Omnibus Package aims to simply and streamline sustainability reporting alongside due diligence requirements.
The package intends to reduce administrative burdens for companies by simplifying reporting and reducing the scope of companies required to report under CSRD. The proposals are estimated to bring total savings in annual administrative costs of around EUR 6.3 billion. The Commission has a clear target to achieve at least 25% reductions in administrative burdens and at least 35% for SMEs before the end of the mandate. Additionally, it aims to boost competitiveness and ensure companies are not smothered by regulations. The Commission believes that by doing so, businesses will be able to grow and create jobs opportunities and attract investment.
EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy. This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way.”
Ursula von der Leyen
President of the European Commission
Criticism On The Proposal
With the proposed adjustments to CSRD drastically narrowing the scope of corporate sustainability reporting (80%), this means there will be a huge reduction in the number of companies who are providing information regarding their sustainability efforts. Many experts see this movement as a step backwards. Effectively, investors are left without the relevant environmental data needed to make informed decisions. Beyond simplification, the reduction in reporting standards results in a loss of key insights into some of the corporate risks arising from climate change.
In addition, though the CSRD timescale has been delayed in order to increase understanding and time for preparation, there are also limitations to this decision. It’s no secret that though the CSRD reporting timeline has been delayed, the rate of global warming has not. Businesses should still prepare, as sustainability reporting will eventually become mandatory.
“With the Omnibus proposals, the EU Commission not only proposes a step backwards, but it also undermines Europe’s competitive advantage in the green transition.”
Filip Gregor, Head of Frank Bold’s Responsible Companies Section
While these proposals are not final, it’s important to stay on top of your sustainability strategy as a business. The new proposals will be submitted to the EU Council and Parliament, with the Commission requesting that it be treated as a priority.
However, global warming is still happening at an alarming rate, and so companies who stay up to date with carbon reporting will likely gain credibility and attract investment. If you are interested in learning more about sustainability reporting, don’t hesitate to get in touch with our team!
