Change for sustainability reporting with EU omnibus

The European Commission is set to reshape corporate sustainability reporting. On February 26, a new legislative proposal was introduced to simplify reporting and due diligence requirements under the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). With a goal of reducing reporting burdens by 25%, the proposal could significantly impact how companies approach ESG compliance. For businesses navigating these regulations, this could mean crucial shifts in obligations and reporting strategies. Here is what is changing, and how to stay ahead.

Here’s what’s changing, and how your company can prepare.

1. EU omnibus reduces number of companies required to report by 80%

The European Commission’s proposal introduces major changes to sustainability reporting, exempting many mid-sized companies while maintaining requirements for larger businesses.

Who is proposed to be in scope?

Companies with more than 1,000 employees and either €50 million+ turnover or €25 million+ in assets. Many mid-sized companies, including listed SMEs, are now exempt. However, the Commission encourages voluntary adoption of the VSME Standard, a proportionate ESG reporting framework developed by EFRAG.

Who could be exempted?

Mid-sized companies that no longer meet the threshold, including listed SMEs.

Tip: Even if exempt, companies especially those with 500+ employees, can benefit from using the VSME voluntary framework to maintain transparency and a competitive edge.

2. EU omnibus postpones reporting for second and third wave companies

The European Commission has granted a two-year delay for sustainability reporting obligations affecting certain businesses.

Who is still required to report on time?

Companies covered under the first wave of CSRD requirements must continue reporting as planned for countries that have transposed CSRD under their national legislation. For countries that have not transposed CSRD (e.g., the Netherlands) companies that are under the scope of NFRD should continue with their sustainability reporting.

Who gets a two-year extension?

• Third wave companies: Listed SMEs, small and non-complex credit institutions, and captive insurance/reinsurance undertakings.

• Second wave companies: Large undertakings that are not public interest entities, including those with more than 500 employees and parent companies of large groups.

Tip: Use this extra time to enhance ESG data management, refine reporting strategies, and focus on material topics ensuring compliance without unnecessary complexity.

3. EU omnibus halts upgrade to reasonable assurance

CSRD initially planned a mandatory transition from limited to reasonable assurance, which would have significantly increased audit and compliance demands. This shift has now been cancelled, though detailed audit guidelines will still be published.

Tip: Strengthen internal controls and opt for limited assurance of ESG information. This ensures high-quality disclosures while keeping audit costs manageable.

4. EU omnibus eliminates sector-specific reporting

The previous CSRD framework required the introduction of sector-specific reporting standards by 2026. Under the new proposal, this requirement has been removed, meaning all companies will now follow the general ESRS framework instead.

5. EU omnibus simplifies value chain reporting

Companies will no longer be required to collect detailed ESG data from SMEs in their value chain for CSRD reporting. However, ESG data may still be required under other directives and regulations.

Tip: Companies can rely on voluntary SME sustainability reporting standards to maintain transparency without excessive due diligence requirements.

6. EU omnibus aligns taxonomy thresholds with CSDDD

The applicability of the EU Taxonomy is now aligned with the CSDDD, meeting the following cumulative conditions:

• €450 million+ turnover
• 1,000+ employees

Companies below this threshold can opt in if they claim their economic activities align with the EU Taxonomy. Additionally, reporting templates will be simplified to reduce complexity.

Tip: Assess whether opting in could provide a competitive advantage, especially for companies aiming to showcase strong sustainability commitments.

7. EU omnibus delays CSDDD implementation

The CSDDD will be delayed by one year, and due diligence monitoring will now occur every five years instead of annually. The scope remains unchanged, but companies will only request limited VSME information from partners with fewer than 500 employees.

Tip: Use this delay to refine due diligence processes and strengthen supplier engagement ahead of future compliance requirements.

8. EU omnibus streamlines CBAM

The Carbon Border Adjustment Mechanism (CBAM) will be streamlined and will now apply only to companies importing more than 50 metric tons of goods per year.

Sustainability reporting and the EU omnibus: The new timeline

With the European Commission’s proposal now under discussion, the final legislation is still years away. Both the European Parliament and the European Council must negotiate and approve it, a process that previously took over two years for CSRD, EU Taxonomy, and CSDDD.

If an agreement is reached by 2026, national implementation is unlikely before 2028. Until then, existing sustainability reporting obligations remain in effect, particularly in countries that have already transposed CSRD into national law. Businesses should continue compliance efforts while preparing for future regulatory changes, ensuring a smooth transition when new rules take effect.

EU Omnibus: Key takeaways

While this proposal introduces major changes, sustainability reporting remains a global standard. ESG disclosures continue to be widely used by investors and financial institutions, with frameworks like GRI and IFRS gaining further relevance. Countries including China, India, Singapore, and Canada are strengthening ESG reporting requirements.

Non-reporting is no longer an option, as financial institutions still need ESG data from their value chains. Companies should proactively engage with voluntary frameworks like the VSME Standard, ensuring compliance while maintaining transparency and competitiveness in an evolving regulatory landscape.

A delay, not a detour. Use the EU omnibus timeline wisely

With the reporting timeline extended, now is the time to take control of your ESG strategy. Identify material ESG topics and focus data collection on what truly matters. This will streamline reporting, reduce complexity, and strengthen the business case for sustainability.

Use this extra time to enhance GHG emissions tracking and align with climate targets. The VSME Standard offers a structured approach that helps maintain transparency while avoiding unnecessary compliance burdens. Seeking expert guidance now will ensure your CSRD strategy remains on track, despite shifting regulations. Rather than waiting for further developments, act now to turn sustainability reporting into a strategic advantage. Strengthening disclosures will reduce inefficiencies, build stakeholder trust, and ensure long-term competitiveness in an ESG-driven market.

Need advice?

Contact our ESG and CSRD specialists directly.