EU Omnibus Proposal | CSRD, CSDDD and EU Taxonomy

The EU Commission “Omnibus” proposal was issued on 26th February 2025. This proposal includes recommended changes to scope, timelines and reporting requirements for the CSRD (Corporate Sustainability Reporting Directive), EU Taxonomy and the CSDDD (Corporate Sustainability Due Diligence Directive).

(Pictured: Orla Carolan, former member, EFRAG Secretariat for European Sustainability Reporting Standards (ESRS), and Head of Consulting, Future Planet).

CSRD Proposed Amendments

Up to 50,000 entities were originally estimated to be in scope for reporting under the CSRD against sustainability matters applying the European Sustainability Reporting Standards (“ESRS”) with the majority of these entities in “wave 1” due to report this year on financial year 2024 data (PIEs and listed entities) “wave 2” due to report in 2026 on 2025 data (large entities and groups). These reports as outlined in the CSRD are subject to limited assurance.

We have already seen first reporters across wave 1 issue reports during February 2025 including Groups such as Bank of Ireland, Philips, Heineken, UniCredit and many more.

Among the Omnibus measures proposed for CSRD are that;

• Reporting will only apply to undertakings with >1,000 employees with either Turnover >€50m or Balance Sheet >€25m which will result in a scoping out of an estimated 80% of undertakings initially in scope for the Directive.
• Voluntary reporting for undertakings with under 1,000 employees with proposal to bring the existing Voluntary SME standard (“VSME”) developed by EFRAG into a Delegated Act (previously not referenced within the CSRD or delegated acts).
• A significant reduction in mandatory data points under ESRS (at present in total there are over 1,000 data points across 10 ESG topics), with a focus on quantitative data over narrative data disclosures.
• Postponement of reporting for Wave 2 (non-PIE) undertakings to 2027 reporting in 2028 giving a two-year reprieve to these undertakings who were due to prepare their reports on 2025 information.
• An increase in thresholds for non-EU undertakings with subsidiaries or branches in the EU with net turnover threshold for an EU subsidiary >€50m and net turnover generated in the EU at group level going from €150m to €450m.

This proposal reduces significantly both the number of undertakings in scope but also the depth and detail of reporting they need to produce, doing so at a later date than expected. Other proposed measures include no move to reasonable assurance but retaining limited assurance for the foreseeable future in addition to a no further standards being developed at sector level with ESRS to remain sector agnostic in nature.

EU Taxonomy

Undertakings initially in scope for CSRD also had to comply with EU Taxonomy disclosures including this also within their annual management report.

The Omnibus proposal seeks to now also make this voluntary for undertakings (with no more than 1,000 employees) with net turnover not exceeding €450 million.

In addition, companies that have made progress towards sustainability targets, but only meet certain EU Taxonomy requirements, may choose to voluntarily report on their partial Taxonomy-alignment. This enables them to demonstrate their existing efforts and progress towards full alignment and receive recognition for their commitment to sustainability. The Omnibus proposal also mandates the Commission to develop delegated acts to ensure standardisation in terms of the content and presentation of the respective reporting. 

CSDDD

Proposed amendments to the CSDDD include additional simplifications aimed at reducing the burden on smaller business partners in the value chain of reporting entities restricting the reach of value chain disclosures to direct business partners. The frequency of monitoring of due diligence measures is proposed to be required every 5 years instead of annually as is the case in the current version of CSDDD.

Challenges, Opportunities and Board Considerations

These proposed measured will reduce significantly the administrative and financial burden of sustainability reporting and compliance for undertakings in the EU and beyond with cost savings expected to be in the region of €4.4bn.

The proposals do however need to be taken through the legislative process at EU level and at national level where directives such as the CSRD have already been transposed into national laws. Without an expedited process this leaves companies unclear where to go from here in particular when they are mid-way through their preparation process for CSRD and the EU Taxonomy disclosures.

For Directors and executives charged with decision making around sustainability strategy and reporting (in whatever form it takes) there has to be wider consideration (and aspiration) for what these objectives initially set out to achieve.

It should not be all about compliance – in the case of CSRD ESRS brings a consistent framework, comparable and standard reporting both for users of sustainability statements and wider stakeholders and a future repository of “good” EU wide data supporting investor decision making and facilitating capital flows into sustainable activities.

When considering what to do next the Board has a key responsibility in taking a holistic view and considering how in the new “Omnibus” world they can ensure their companies make a difference whether they are required to do so or not.