EU Commission Presents Omnibus Package to Simplify Sustainability Reporting
Feb 28, 2025Audit / SustainabilityAs expected, the European Commission presented its first omnibus package on February 26, 2025, aimed at simplifying sustainability reporting requirements. The proposed changes seek to reduce administrative burdens for companies, limit the number of entities required to report, and make reporting more efficient overall.
This initiative aligns with the EU Competitiveness Compass aiming to streamline existing regulations, ease the burden on businesses, and foster innovation. Small and medium-sized enterprises (SMEs) in particular are expected to benefit from these measures, strengthening their competitiveness and supporting the EU economy as a whole.
With the publication of this draft, concrete proposals for simplifying sustainability reporting are now available. Companies previously subject to reporting obligations will be particularly affected. However, as these proposals are still in the draft stage, they are not yet legally binding—the full legislative process must be completed before they can take effect. It remains to be seen to what extent and how quickly the EU Commission will implement these changes.
Key Planned Changes
1. Reduction of the CSRD Scope
The obligation to report under the Corporate Sustainability Reporting Directive (CSRD) will apply only to large companies with more than 1,000 employees and either a revenue of at least €50 million or a balance sheet total of more than €25 million. This brings the scope closer to that of the Corporate Sustainability Due Diligence Directive (CSDDD). According to EU Commission estimates, this change will exclude around 80% of previously affected companies from reporting obligations.
The obligation to report under the Corporate Sustainability Reporting Directive (CSRD) will apply only to large companies with more than 1,000 employees and either a revenue of at least €50 million or a balance sheet total of more than €25 million. This brings the scope closer to that of the Corporate Sustainability Due Diligence Directive (CSDDD). According to EU Commission estimates, this change will exclude around 80% of previously affected companies from reporting obligations.
2. Postponement of Reporting Deadlines
Companies that would have been required to report from 2025 will now have to start in 2028. This applies mainly to large companies that are not publicly listed. However, publicly listed companies with more than 500 employees must continue reporting from the 2024 financial year.
Companies that would have been required to report from 2025 will now have to start in 2028. This applies mainly to large companies that are not publicly listed. However, publicly listed companies with more than 500 employees must continue reporting from the 2024 financial year.
3. Adjustments to the EU Taxonomy Regulation
Disclosure obligations under Article 8 of the EU Taxonomy Regulation will be reduced. For companies with fewer than 1,000 employees or revenue under €450 million, taxonomy reporting will be voluntary. Additionally, more flexibility will be introduced by defining materiality thresholds for taxonomy-related indicators.
Disclosure obligations under Article 8 of the EU Taxonomy Regulation will be reduced. For companies with fewer than 1,000 employees or revenue under €450 million, taxonomy reporting will be voluntary. Additionally, more flexibility will be introduced by defining materiality thresholds for taxonomy-related indicators.
4. Simplification of Reporting Requirements for SMEs
Publicly listed SMEs will be excluded from the CSRD scope. Furthermore, large companies cannot require smaller suppliers (with fewer than 500 employees) to provide additional sustainability information beyond the voluntary standard for SMEs (“VSME voluntary standard”).
Publicly listed SMEs will be excluded from the CSRD scope. Furthermore, large companies cannot require smaller suppliers (with fewer than 500 employees) to provide additional sustainability information beyond the voluntary standard for SMEs (“VSME voluntary standard”).
5. Restriction of Due Diligence Obligations
Due diligence obligations will primarily focus on direct business partners (Tier-1 suppliers). The requirement for civil liability and the implementation of a climate transition plan will be removed. The first application date for the CSDDD has been postponed to July 26, 2028.
Due diligence obligations will primarily focus on direct business partners (Tier-1 suppliers). The requirement for civil liability and the implementation of a climate transition plan will be removed. The first application date for the CSDDD has been postponed to July 26, 2028.
6. Elimination of Sector-Specific Sustainability Standards
The requirement to introduce sector-specific European Sustainability Reporting Standards (ESRS) will be removed. Instead, existing standards will be revised, and the number of required data points will be reduced.
The requirement to introduce sector-specific European Sustainability Reporting Standards (ESRS) will be removed. Instead, existing standards will be revised, and the number of required data points will be reduced.
7. Adjustments to Sustainability Report Audits
The planned transition from limited assurance to reasonable assurance auditing will be canceled. Instead, targeted audit guidelines for limited assurance will be developed.
The planned transition from limited assurance to reasonable assurance auditing will be canceled. Instead, targeted audit guidelines for limited assurance will be developed.
8. Changes for Parent Companies in Third Countries
Parent companies with subsidiaries in the EU will only be required to report if they generate at least €450 million in revenue within the EU (previously €150 million).
Parent companies with subsidiaries in the EU will only be required to report if they generate at least €450 million in revenue within the EU (previously €150 million).
Previously, the disclosure requirement under Article 8 of the EU Taxonomy Regulation applied to all companies required to submit sustainability reports. With the planned reduction in the CSRD scope, the number of companies subject to EU taxonomy reporting will also decrease.
Simplifying and streamlining sustainability reporting requirements is a welcome development. However, we must remain committed to our sustainability goals, as climate change is real and has far-reaching economic and societal impacts. Sustainability remains a key success factor, especially for SMEs—regardless of regulatory requirements. Companies that adopt sustainability processes early on will not only strengthen compliance but also enhance competitiveness in an increasingly sustainability-driven market. Ultimately, it is not regulation alone but market dynamics that will determine which businesses successfully navigate the transition.
Annette Dési, Head of Sustainability Team, DEKRA Certification GmbH
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Under the planned changes by the EU Commission, only companies with more than 1,000 employees will be required to submit sustainability reports under the CSRD in the future. This will reduce the number of affected companies by approximately 80%. Companies with fewer than 1,000 employees will benefit from significant relief but may still be indirectly affected if they are part of the supply chain of large companies.
The introduction of the new regulations is to be postponed by two years: instead of applying to the 2025 reporting period, the obligation will now take effect for the 2027 reporting period. Companies with more than 1,000 employees should strategically use this additional time to prepare early for the new requirements. This includes implementing sustainable reporting structures, optimizing internal processes, and ensuring efficient data collection. A further postponement is unlikely, so this time should be used wisely.
Reporting obligations for SMEs will be reduced to a minimum. Additionally, large companies will not be allowed to request additional sustainability information from SMEs with fewer than 500 employees beyond the VSME voluntary standard, unless there are compelling reasons. Since SMEs are often indirectly affected by the requirements of their business partners, they should assess whether the VSME voluntary standard is a suitable option for them. This allows for standardized, simplified reporting and significantly reduces administrative burdens.
Companies with more than 1,000 employees and an annual net revenue of up to €450 million will be able to report on the taxonomy voluntarily in the future. Additionally, the taxonomy reporting obligation under Article 8 will no longer apply to certain companies. Companies that wish to continue providing taxonomy information should assess whether and to what extent it is relevant for their stakeholders. Voluntary reporting can be beneficial, for example, as part of sustainability strategies or for attracting investors.
- Companies with more than 1,000 employees:
- Utilize the extended deadline to optimize existing reporting processes and improve internal data collection efficiency.
- Ensure that existing sustainability structures are further developed to meet legal requirements seamlessly in the long term.
- Begin analyzing early which new requirements are particularly relevant and how they can be integrated into the corporate strategy.
- Companies with fewer than 1,000 employees:
- Familiarize themselves with the VSME voluntary standard and evaluate whether its adoption is beneficial for efficiently handling ESG requests from business partners.
- Use existing sustainability information strategically to ensure transparency for stakeholders while avoiding excessive reporting obligations.
- Assess which ESG data is regularly requested to optimize internal data collection and minimize the effort required for external requests.