The EU Omnibus package and next steps for CSRD reporting

Dee Moran, FCA, explores the potential impact of the European Commission’s much-anticipated Omnibus package on the Corporate Sustainability Reporting Directive 

26 February 2025 felt like doomsday for many immersed in sustainability. After weeks of rumours, the European Commission published its first Omnibus package of simplification measures for sustainability reporting and regulation.

If approved, these measures will substantially water down the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive, Carbon Border Adjustment Mechanism and EU taxonomy for sustainable activities.
 
In publishing the proposals, the European Commission noted that they would enable businesses “to grow and create quality jobs, attract investments, get the necessary funds for their transition towards a more sustainable economy and help the EU meet the Green Deal’s ambitious objectives”.

Many in the profession were dismayed by the introduction of the new CSRD simplification proposals, however, particularly those that had just published their 2024 annual reports with the required environmental, social and governance (ESG) information included for the first time. 

Their companies have invested heavily in sustainability reporting and, depending on their size, could now potentially fall out of scope of the CSRD under the new proposals.
 
Their less prepared counterparts, meanwhile, will have felt some relief that their own tardiness in starting their sustainability journey and preparing for CSRD reporting has been rewarded.

So, where does the Omnibus package leave the future of CSRD reporting? Some of the proposed amendments are outlined here, with a short analysis for each.

Timeline: two-year delay

The Omnibus measures propose delaying the deadline for CSRD reporting by two years—to 2027 for wave two companies, and 2028 for wave three.

The two-year ‘stop the clock’ proposal has generally been welcomed as it would give companies more time to prepare for CSRD reporting. 

There are concerns among some, however, that the two-year delay is too long, with some maintaining that a 12-month lag would have been more effective in maintaining momentum.

Budgets are already approved for next year, but securing the budget for a second year might be more challenging.  

Overall, however, the proposed delay is being viewed as a welcome means to provide a much-needed breather for companies. 

Threshold: employee numbers

The European Commission’s Omnibus package proposes raising the threshold for numbers employed by companies in scope of the CSRD from 250 to 1,000 (and either a turnover greater than €50 million or balance sheet total exceeding €25 million).

This proposal would reduce the number of companies in scope of the CSRD across Europe by about 80 percent—from 50,000 companies down to about 7,000. 

The 7,000 figure is also substantially lower than the 11,000 companies obliged to report under the Non-Financial Reporting Directive. 

The higher employee threshold proposal has met with varying reactions in the profession, with many expressing that 1,000 goes too far, and that 500 employees and above would be more proportionate. This will no doubt be debated at length in the months ahead. 

It is worth pointing out, however, that companies that would not fall in-scope of the CSRD under the new proposed threshold may still opt to voluntarily adopt the proposed standard.

Voluntary SME standard

The Commission has proposed that it will adopt, by way of a delegated act, a voluntary sustainability reporting standard (VSME) to facilitate reporting of sustainability information by companies that are not in-scope for the CSRD. 

This will be based on the revised voluntary sustainability reporting standard for non-listed micro, small and medium enterprises (VSME) submitted by the European Financial Reporting Advisory Group (EFRAG) to the European Commission in December 2024.

Value chain cap

The Omnibus measures propose the introduction of a ‘value chain cap’.

This move would serve to limit the information CSRD reporters can request from non-CSRD reporters in their value chain with fewer than 1,000 employees.

They would not be permitted to request any information exceeding that specified in the revised VSME.

While this proposal could potentially diminish the comprehensiveness of sustainability reports, it would also reduce the sustainability reporting burden on smaller companies and—provided that the revised VSME standard is comprehensive—should still provide companies in-scope of the CSRD with the value chain information they need.

Reasonable assurance standards

The requirement to have assurance on a sustainability report is a fundamental part of the CSRD, with limited assurance in the first instance and the potential to move to reasonable assurance following a review. 

The Omnibus package seeks to remove the requirement for reasonable assurance as a means to streamline the reporting process, while also maintaining some oversight. 

This proposal has been largely welcomed as it would reduce the cost of compliance for CSRD reporters and would also be less burdensome. 

Some stakeholders have, however, voiced concerns that removing the need for reasonable assurance over the longer term may compromise the trustworthiness and reliability of data. 

Investors, in particular, have been vocal about their need for accurate data to reduce the risk of greenwashing. Reasonable assurance would provide an additional level of comfort.

European Sustainability Reporting Standards

The Omnibus package commits to simplifying the European Sustainability Reporting Standards (ESRS), including a reduction in the number of data points, clarification of provisions deemed unclear and an improvement in consistency with other pieces of legislation.

With in excess of 1,100 data points, the volume and complexity of the ESRS has raised many concerns, and Chartered Accountants Ireland was critical of the high number of ESRS data points in our response to the initial public consultation on the draft ESRS. 

The Omnibus proposes to simplify the ESRS by reducing the number of data points and focusing on qualitative over quantitative information. 

The Commission has asked EFRAG to commence the work of simplifying the ESRS and to provide their technical advice by 31 October 2025. It is important, however, that sufficient time is allowed for proper consultation with stakeholders.

Sector-specific standards

The Omnibus proposal reverses the existing plan for sector-specific standards to be developed and adopted by the European Commission, a move that would have increased the number of data points required for CSRD reporting. 

Again, there are varying views on this proposal in the profession. Some maintain that sector-specific standards would lead to more relevant and meaningful disclosures in specific industries while also providing for more effective comparability. 

Others cite increased cost and complexity as a potential negative, particularly for companies operating across multiple sectors. 

Double materiality assessment

The Omnibus proposal does not change the CSRD’s double materiality perspective, meaning that companies remaining in scope will have to report on how sustainability risks affect their business and their own impact on people and the environment.

The retention of the double materiality assessment (DMA) is not surprising given that it is a key requirement under the CSRD. 

While cost and the availability of data have been cited by some as barriers to completing the DMA, the recommended reduction in ESRS data points and proposed two-year reporting delay should assist reporters in meeting this requirement.     

What happens next?

It is important to remember that these Omnibus simplification measures are just proposals. The next step will see these proposals reviewed by both the European Parliament and the Council of the European Union. 

A staggered approach to the proposed amendments would see the ‘stop the clock’ proposals be approved in the first instance to give companies clarity on their reporting requirements for 2025. 

The European Council and the European Parliament have already approved this amendment. 

The proposal now needs to be approved formally by the Council and signed by the Presidents of both Institutions. It will then be published in the Official Journal, which is expected by the end of June. Member States have until 31 December 2025 to transpose into their national laws.

We have been advocating for speedy transposition of the Directive to the Department of Enterprise, Tourism and Employment , which has committed to prioritising this. 

Once the ‘stop the clock’ proposal has been approved, this will allow time for the other proposals to be debated, and for EFRAG to develop and present to the European Commission a revised set of ESRS and a new set of voluntary standards based on the VSME. 

The revised ESRS are expected to be adopted as soon as is practicable, but no later than six months after the entry into force of a revised CSRD. 

Our professional accounting team at Chartered Accountants Ireland will continue to review these proposals, engage with members, other professional bodies and relevant stakeholders, and respond to European Commission and EFRAG consultations on your behalf.

Our priority, as always, will be to represent our members in lending our voice to continued progress in the sustainability agenda that is also proportionate and cost-effective for companies. 

While the initial reaction to the Omnibus package of proposals was mixed, it has been encouraging to hear from many in the profession that a reduced scope would allow them to better focus on material matters and on gathering quality data, while the delayed timeline would also give them greater scope to prepare thoroughly for CSRD reporting. 

Dee Moran, FCA, is Professional Accountancy Lead at Chartered Accountants Ireland