The European Commission has published an ‘Omnibus’ package, which includes proposals to amend the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), a two-year postponement of CSRD reporting requirements for companies in the second and third waves and delaying transposition and application of the CSDDD by one year.

CSRD

Postponement of Reporting Obligations

It is proposed that CSRD obligations for companies due to report in 2026 and 2027 would be postponed by two-years. Accordingly, companies that are currently due to report in 2026 on FY 2025 data would report in 2028 on FY 2027 data. The proposal does not amend the reporting timeframe for companies reporting in 2025 on FY 2024.

Key Proposed Amendments

Scope: Mandatory reporting will be limited to large companies with more than 1,000 employees (and either a turnover above EUR 50 million or a balance sheet total above EUR 25 million). Listed SMEs and large undertakings with up to 1,000 employees will be excluded. This will align the CSRD more closely with the scope of the CSDDD. The net turnover threshold for non-EU companies is increased from EUR 150 million to EUR 450 million (generated in the EU).

ESRS: The Commission intends to adopt a delegated act to revise the ESRS, including a significant reduction in the number of mandatory data points, clarification on certain provisions, improved consistency with other EU laws, clearer instructions on materiality and enhanced interoperability with global standards. The requirement to report from a “double materiality” perspective will be retained.

Sector-Specific ESRS: The mandate for sector-specific ESRS will be removed.

Taxonomy Disclosures: A derogation from Article 8 of the EU Taxonomy Regulation will permit large undertakings with more than 1,000 employees and a net turnover not exceeding EUR 450 million an “opt-in” whereby such companies would be subject to taxonomy disclosures only where they claim that their activities are “Taxonomy-aligned”. This would remove taxonomy reporting for companies with net turnover not exceeding €450 million if they don’t claim Taxonomy-alignment.  The proposal also permits more flexibility for such companies, including the option of reporting on partial Taxonomy-alignment.

Assurance: The Commission will issue targeted assurance guidelines by 2026. The potential of moving from limited to reasonable assurance will be removed.

Voluntary Reporting Standard: For companies outside CSRD scope the Commission proposes to adopt a voluntary standard, based on the VSME standard developed by EFRAG.

Value-Chain Reporting: A “value-chain cap” will limit the information that reporting companies can request from entities within their value chains with not more than 1,000 employees to the information specified in the voluntary standard.

Single Electronic Format: The proposal amends the requirement for reporting in electronic format until the relevant rules are adopted.

CSDDD

Postponement

The transposition deadline for Member States will be postponed by one year to 26 July 2027 with application for the first phase of companies postponed by one year to 26 July 2028.

Key Proposed Amendments 

Simplified Due Diligence Requirements:

• Chain of Activities: Due diligence measures will be limited to the companies’ own operations, subsidiaries, and direct (“tier 1”) business partners. In-depth assessments of indirect business partners will only be required where there is plausible information suggesting adverse impacts.
• Financial Services: The review clause regarding the potential extension of the scope to the downstream financial services activities is removed.
• Monitoring: The required frequency of periodic monitoring of the adequacy and effectiveness of due diligence measures will be reduced from annually to every five years.
• Stakeholder Engagement: The definition of ‘stakeholders’ will be narrowed and the stages of the due diligence process requiring stakeholder engagement will be limited. 
• Termination of Business Relationships: The obligation to terminate business relationships as a last resort will be removed, although the obligation to suspend such relationships will remain.

Penalties and Civil Liability: The minimum cap for pecuniary penalties (5% of turnover) will be deleted. The specific EU-wide civil liability regime will also be removed.

Climate Transition Plan: The requirement to ‘put into effect’ the climate transition plan will be deleted. Instead, the plan should include implementation actions planned and taken, aligning with CSRD reporting requirements.

OTHER ASPECTS OF OMNIBUS

The Omnibus package also includes a proposal for a regulation amending the Carbon Border Adjustment Mechanism Regulation.

The Commission has also launched for consultation a draft delegated act amending the Taxonomy Disclosures Delegated Act and the Taxonomy Climate and Environmental Delegated Acts.

NEXT STEPS

The legislative proposals will now be submitted to the European Parliament and the Council for consideration and adoption.

The proposed amendments are set out in two draft directives as part this Omnibus package. The first directive focuses on timing, postponing second and third wave reporting under CSRD and postponing transposition and application of CSDDD.  The second directive sets out the other proposed amendments to CSRD and CSDDD.

The Commission has encouraged the European Parliament and the Council to prioritise the Omnibus package, in particular the first directive which, as currently drafted, is required to be transposed by Member States by 31 December 2025.  Member States will have a 12-month transposition period for the amendments to both CSRD and CSDDD set out in the second directive once it enters force.