On February 26, 2025, the European Commission introduced the Omnibus Directive, bringing significant changes to the Corporate Sustainability Reporting Directive (CSRD), the European Sustainability Reporting Standards (ESRS), and the EU Taxonomy Regulation. These changes provide companies with more flexibility, allowing them to align their sustainability reporting more effectively with strategic goals. Companies now have the opportunity to proactively leverage freed-up resources to secure long-term competitive advantages.

Key Changes to the CSRD

Reduced Scope & New Deadlines

  • Only companies with more than 1,000 employees and either annual revenue exceeding €50 million or a balance sheet total over €25 million will be subject to reporting obligations.
  • Mandatory reporting for these companies will begin with fiscal year 2027 (reporting in 2028).
  • Large publicly listed companies already subject to reporting requirements must continue until 2028, after which companies with up to 1,000 employees will no longer be required to report.

Limitations on value chain reporting

Previously, companies had to disclose information across their entire value chain in their sustainability reports. This often led larger companies to request extensive data from their suppliers and business partners.

Under the Omnibus Directive, companies will only be allowed to request information from non-reporting SMEs that is included in the Voluntary Standard for SMEs (VSME). Any additional data can only be requested if it is essential for the reporting company’s sustainability disclosure.

There are concerns that the proposed legislation may result in companies required to report receiving less reliable sustainability data from their value chain. However, SMEs will be less burdened as large companies will only be able to request limited sustainability data from their suppliers.

Audit requirements remain at “limited assurance” level

The original CSRD aimed to gradually increase the audit standard for sustainability reports from “limited assurance” to “reasonable assurance.” However, this requirement has now been removed. As a result, companies will continue to be subject only to a limited assurance review of their reports.

Revision of ESRS standards and elimination of sector-specific standards

The ESRS will be revised. The key changes include:

  • Reduction in the number of data points to simplify reporting.
  • Amendments to provisions to clarify uncertainties and improve consistency with other EU regulations.
  • Elimination of sector-specific standards, which were originally intended to enable more detailed reporting for individual industries.

The revision of the ESRS is expected to be completed within six months after the Omnibus Directive comes into force.

Changes to the EU Taxonomy Regulation

  • Only companies with more than 1,000 employees and €450 million in revenue will be required to report on their taxonomy alignment.
  • Smaller companies will be offered a voluntary opt-in option.
  • Reporting requirements will be reduced by 70%, including simplified formats and new materiality thresholds.

These changes will reduce the burden on companies but may also lead to less detailed ESG information being available to banks and investors.

Conclusion: ESG Remains Strategically Important – Time to Act

The Omnibus Directive is not a retreat from ESG but rather an opportunity for strategic realignment. Companies can now focus on relevant ESG aspects instead of being overwhelmed by excessive reporting obligations.

  • Secure Competitive Advantage: Sustainability remains a key factor in financing, supply chains, and customer contracts.
  • Increase Efficiency: Fewer reporting requirements free up capacity for concrete sustainability initiatives.
  • Reputation & Risk Management: Companies that continue to report actively will maintain stakeholder trust in the long term.

Companies should closely monitor these developments and adapt their ESG strategy to the new framework. Voluntary sustainability reporting may still be a crucial success factor. Now is the time to strategically leverage available resources and establish ESG as a true value driver!