The highly anticipated Omnibus proposal is finally here! While the Corporate Sustainability Reporting Directive (CSRD) is fundamentally altered, the most drastic rumors failed to materialize. Here’s a summary of the main changes proposed for the CSRD:
- Mandatory CSRD reporting will only apply to companies with 1000+ employees and either a net turnover above €50 million or a balance sheet above €25 million.
- All other companies will be provided with proportionate voluntary standards.
- A “value chain cap” will be introduced for all voluntary reporting companies that will limit the responsibility to collect and report information from the company’s value chain.
- No sector-specific ESRS will be promulgated.
- The assurance requirement will not ratchet up to “reasonable assurance” and will remain at “limited assurance.”
- No assurance standards will be promulgated; instead, the Commission will adopt assurance guidelines.
- The First Set of ESRS will be reopened and revised.
- Second and third-wave reporting will be frozen for two years while changes are made to the CSRD so that certain out-of-scope companies will not be required to report before the Omnibus becomes law.
- Non-EU companies will see the net turnover scope rise from €150 million generated in the EU to €450 million.
Changes in scoping requirements are expected to exclude 80% of previously in-scope companies from mandatory reporting. It’s too early to speculate what changes may be made to the ESRS and which if any data points are removed. Despite the substantially scaled-back scope under the Omnibus, the EU did not change its materiality focus. Double materiality will still govern CSRD reporting and double materiality assessments will remain relevant for companies that are required to report. The Omnibus also comes with substantial changes to the Corporate Sustainability Due Diligence Directive (CSDDD) that we’ll blog on next week.
But keep in mind the roller coaster ride isn’t over – yesterday’s action is just a proposal and is still subject to negotiation/change, in addition to member state transposition of whatever the final version is. As Advisory Board member Donato Calace noted: “This is just the pilot episode of a very long soap opera.”
Our members can learn more about CSRD reporting here.
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