On February 26, 2025, the European Commission introduced a new Omnibus proposal that, if implemented, would significantly ease sustainability reporting requirements.
The Omnibus proposal is part of a broader agenda aimed at enhancing the EU's competitiveness and promoting sustainable economic growth. The underlying goal is to create a more favorable business environment, particularly for small and medium-sized enterprises (SMEs), which often find regulatory burdens overwhelming.
The proposal includes substantial changes to the Corporate Sustainability Reporting Directive (CSRD) and its criteria. One of the key changes is the limitation of reporting obligations to large companies that employ at least 1,000 people. The new criteria for reporting obligations under the proposal would be:
- More than 1,000 employees
AND - More than €50 million in turnover
OR - More than €25 million in total assets
Currently, companies subject to CSRD reporting obligations must meet two of the following criteria: more than 250 employees, more than €50 million in turnover, or more than €25 million in total assets. This change would mean that up to 80% of the current reporting companies would be exempt from these obligations.
Under the new proposal, companies that fall outside the CSRD would be provided with a voluntary reporting standard based on the Voluntary Sustainability Reporting Standard for SMEs (VSME). The intention is that companies reporting under the CSRD could require only VSME-compliant information from their value chain, thereby reducing the reporting pressure on smaller companies.
At the same time, the Corporate Sustainability Due Diligence Directive (CSDDD), also known as the Corporate Responsibility Directive, would also see some easing of requirements. The implementation of the CSDDD would be postponed by one year, giving companies more time to prepare. Under the new proposal, companies' due diligence obligations would apply only to direct contractual partners and no longer to indirect partners in the value chain.
Proposed changes to the taxonomy regulation are also significant. Large companies with a turnover of less than €450 million would have the option for voluntary taxonomy reporting. From now on, taxonomy reporting would only be mandatory for the largest companies with a turnover exceeding €450 million.
The proposal is also expected to result in significant cost savings. Changes to the CSRD are estimated to bring annual savings of several billion euros. Additionally, changes to the CSDDD are expected to yield annual savings of €320 million for companies. This means that businesses can allocate the saved funds to other development projects or investments.
The Commission's proposal will be discussed in the European Council and the European Parliament. During this process, the content of the proposal may still change, or it could even be revoked if the Council and Parliament cannot reach a consensus. Therefore, there remains considerable uncertainty surrounding the proposal.
Currently, the potential changes are causing uncertainty among companies regarding the future scope of reporting and what measures would be reasonable in preparing for reporting. Greenstep's sustainability experts believe that for many companies, identifying their essential impacts and particularly mapping the financial risks and opportunities related to sustainability themes has brought forth many new aspects of their operations that can still be leveraged in their sustainability reporting. The proposed change would relieve many companies from stringent reporting requirements and provide them with more resources to develop their own sustainability efforts and lighter reporting, for example, in accordance with VSME.
It is certain that companies that genuinely want to operate sustainably will continue to report in the future, regardless of whether there is legislative pressure or not.
Published 27.02.2025