Just as the first Sustainability Reports, required by the Corporate Sustainability Reporting Directive (”CSRD”), are being published by in scope companies in the first wave (i.e. companies required to include a Sustainability Report for the Financial Year 2024), the European Commission have issued significant proposed changes to existing rules.
On the 26 February 2025, the European Commission released a new package of proposals (“Simplification Omnibus I and II”). The package aims to simplify EU rules in a bid to boost competitiveness and create a more favorable business environment for EU companies and include a proposal for a Directive amending the CSRD and the Corporate Sustainability Due Diligence Directive (“CSDDD”) and a draft Delegated act amending the Taxonomy Disclosures and the Taxonomy Climate and Environmental Delegated Acts subject to public consultation.
This blog will focus on Omnibus I, specifically the proposals to simplify Sustainability Reporting, including the CSRD. The main changes proposed in the area of Sustainability Reporting are as follows:
- Reduction of approx. 80% in number of reporting companies: The reporting requirements would only apply to large undertakings with more than 1000 employees (i.e. undertakings that have more than 1000 employees and either a turnover above EUR 50 million or a balance sheet total above EUR 25 million).
- ‘Value chain cap’: Companies with up to 1,000 employees (i.e. out of scope of the CSRD under new proposals) would be protected whereby the Commission will adopt by delegated act a voluntary reporting standard, based on the standard for SMEs (“VSME”) developed by EFRAG. This would limit the information these out of scope companies would have to provide to in scope companies.
- Revision of the European Sustainability Reporting standards (“ESRS”): The package aims to substantially reduce the number of data points, clarify provisions and improve consistency with other legislation.
- No sector-specific standards: The proposal will eliminate the publication of sector specific standards.
- Removing the reasonable assurance standard: Limited assurance requirement will remain with no increase to a reasonable assurance requirement.
- Delay of reporting requirements: The package proposes to postpone the entry into application of the reporting requirements for large companies and for listed SMEs by two years (wave 2 and 3 under existing CSRD rules). This is to allow for conclusion on the way forward in light of these proposals.
Importantly, it is early days in relation to these proposals which must be approved by the European Council and Parliament before being enacted. As part of that process, significant changes are possible. Once enacted, the Directive would then need to be transposed into local law in the various jurisdictions, including Ireland.
Under existing rules in Ireland, in scope companies in wave 1 and wave 2 are required to include a Sustainability Report for the Financial Years 2024 and 2025 respectively. A prompt conclusion in relation to these proposals would be welcomed to assist these companies in determining a path forward in relation to Sustainability Reporting.
Undoubtedly, these proposals will have brought relief for many.
The proposals are anticipated to bring cost savings for companies. Equally, proposals will have also brought frustration as some companies have already invested heavily in meeting requirements and uncertainty now reigns. It is clear that the climate challenges have not gone away and companies may also reflect on what to implement, regardless, in an effort to have a positive impact on climate and people.
Without question this will be watched closely by all impacted.
Other resources: European Commission, Questions and answers on simplification omnibus I and II
