Since the beginning of 2025, the big story in the EU has been the omnibus simplification proposal. The EU government has worked since February to reduce the burden of sustainability regulation on businesses by simplifying both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Supply Chain Due Diligence Directive (CSDDD). Finally, the dust is settling, and a light is emerging at the end of the omnibus tunnel. The EU Parliament and Council announced a tentative deal resulting from trilouges. Ropes & Gray summarizes the main points of the deal as they relate to the CSRD:
- Reporting will be required for EU companies with over 1,000 employees on average and net annual turnover of more than €450 million. According to some sources, this change will reduce the number of in-scope companies by approximately 90%. The political agreement aligns with the Council’s negotiating position. The Parliament had advocated for a 1,750 employee threshold.
- The EU net turnover threshold for non-EU companies will be €450 million.
- Financial holding undertakings will be exempt.
- There will be a transition exemption for companies that had to report starting with the 2024 financial year (“wave one” companies) falling out of scope for 2025 and 2026.
- Smaller companies with less than 1,000 employees will not be required to report information that goes beyond the voluntary European Sustainability Reporting Standards.
- Sector-specific reporting will be voluntary.
- There will be a review clause concerning a possible extension of the scope of the CSRD.
- The European Commission will create a digital portal for businesses with access to templates and guidelines on EU and national reporting requirements.
This deal substantially scales back the CSRD but keeps the core of the reporting framework alive. Notably, no changes were made to the double materiality standard and non-EU company reporting remains intact. Those companies that remain in scope will face additional relief from the new simplified ESRS, about which I wrote yesterday. The omnibus deal isn’t final, and various votes to adopt the deal will conclude by December 16. For the time being, it appears that we finally have some certainty on how the omnibus will shape the future of EU reporting.
Our members can learn more about the CSRD here.
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