On 26 February 2025, the European Commission unveiled a comprehensive set of revisions aimed at streamlining EU sustainability reporting rules.
According to Position Green, this proposal, an integral part of the EU’s Omnibus approach, seeks to amend several existing directives such as the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Carbon Border Adjustment Mechanism (CBAM). This overhaul signifies a pivotal shift towards enhancing economic competitiveness and security within the EU.
The proposed changes are particularly consequential for large entities, stipulating that only those with over 1,000 employees and either EUR 50m in turnover or EUR 25m in assets will be mandated to comply with the CSRD. This shift will necessitate these large corporations to gather essential ESG data from their suppliers and other business affiliates. To facilitate this, the EU plans to introduce a standardized reporting model based on the “VSME” (voluntary standard for SMEs), which is poised to become a statutory requirement.
If ratified, these amendments will defer the reporting obligations by up to two years for firms currently on the brink of their reporting deadlines. The initiative also proposes simplifications in the reporting content, moving towards a more streamlined mandatory reporting framework.
These regulations not only impact EU-based companies but also extend to non-EU entities engaging with European partners, who must be vigilant not to falter in their sustainability reporting efforts. The ramifications of these changes are profound, as they necessitate a robust strategy for managing various sustainability indicators, vital for addressing challenges like climate change and workforce diversity.
As Julia Staunig from Position Green remarks, “In practice, this ‘trickle-down’ effect means that all companies across Europe need to diligently collect and manage their non-financial data.”
The deadlines for submission of reports will also see modifications. Companies currently reporting will maintain their schedules, while those poised to report next year could now have until 2028 to prepare their submissions, easing the immediate burden.
Moreover, the Commission has proposed maintaining limited assurance for auditing non-financial data instead of the anticipated shift to reasonable assurance. Plans for sector-specific ESRS are also recommended to be abandoned, which would streamline the compliance process further.
For companies presently not covered under the CSRD but likely to be encapsulated in the future, it’s crucial to continue preparations to avoid potential non-compliance risks. These proactive measures will ensure readiness for future reporting requirements, regardless of immediate obligations.
Lastly, the integration and analysis of non-financial data should be viewed as more than a compliance activity; it is a strategic tool essential for leveraging growth opportunities and enhancing corporate resilience amidst global challenges.
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