The EU’s Omnibus proposal brings major changes to the Corporate Sustainability Reporting Directive (CSRD), making it easier for companies to follow. These updates address business concerns, streamline reporting, reduce administrative work, and improve alignment with other regulations.

Reduction in Scope of Reporting Companies

A key change by EU Omnibus proposal reduces the number of companies required to report under the CSRD. Now, only large companies with over 1,000 employees and either €50 million turnover or €25 million in assets must report. This adjustment cuts the number of affected companies by about 80%. The new scope aligns more closely with the Corporate Sustainability Due Diligence Directive (CSDDD), ensuring regulatory consistency.

Introduction of the ‘Value Chain Cap’

Companies with fewer than 1,000 employees will no longer fall under the CSRD scope. To address this, the European Commission will introduce a voluntary reporting standard through a delegated act. This standard, based on the SME Voluntary Standard (VSME) from EFRAG, will serve as a safeguard. It will limit how much sustainability information larger companies and financial institutions can request from smaller businesses. The goal is to prevent excessive reporting demands on SMEs while maintaining transparency in corporate sustainability efforts.

Revisions to the European Sustainability Reporting Standards (ESRS)

The Commission will revise the ESRS to simplify and clarify sustainability disclosure requirements. The revision will:

• Reduce the number of required data points,
• Remove unclear or duplicative provisions,
• Improve alignment with other EU regulations,
• Eliminate sector-specific reporting requirements from the CSRD.

These changes will streamline reporting and make compliance easier. At the same time, businesses will still disclose key sustainability information effectively.

Removal of the Reasonable Assurance Requirement

Another key amendment removes the need for companies to shift from limited to reasonable assurance in sustainability reporting. The original CSRD framework required stricter external audit verification over time. Removing this rule lowers compliance costs and simplifies reporting, especially for new reporters.

Postponement of Reporting Deadlines

To give companies more time, the omnibus proposal delays CSRD reporting by two years for large companies still implementing the directive. Listed SMEs also get an extension. This delay helps businesses adjust and gives co-legislators time to finalize regulatory changes.

Changes in the Scope of the CSRD

The current CSRD framework requires large companies to report if they meet two of three thresholds: €50 million net turnover, €25 million balance sheet total, or 250 employees. Additionally, SMEs with securities listed on EU-regulated markets must comply. However, many argue this places too much burden on smaller enterprises.

To address this, the EU omnibus proposal proposes limiting mandatory reporting to companies with over 1,000 employees while keeping the turnover and balance sheet thresholds. This change greatly reduces the number of affected companies. Others may still report voluntarily using the VSME standard, which the Commission will adopt through a delegated act.

Double Materiality Principle Remains Unchanged

Despite these extensive modifications, the EU Omnibus directive does not alter the CSRD’s double materiality principle. Companies that remain in scope will still be required to report on both how sustainability risks affect their business and how their operations impact people and the environment. This ensures that corporate sustainability disclosures continue to provide comprehensive insights into sustainability risks and opportunities.

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