ESG & Omnibus I: Einfacher, aber noch unsicher

At the end of February, the EU Commission announced a number of changes to parts of the European Green Deal in order to simplify them for companies. This affects the CSRD, ESRS, EU taxonomy and the CSDDD supply chain directive.

CSRD proposals

A Size criterion for the reporting obligation is increased to large companies and parent companies with more than 1,000 employees; the thresholds for revenue (> EUR 50 million) and total assets (> EUR 25 million) remain the same. The increase in the number of employees as a criterion is independent of capital market orientation.
First reporting dateCompanies that were originally required to report for the first time from the 2025 financial year and whose reporting obligation continues to exist after the adjustment of the employee:headcount indicator are not to be required to report until two years later (reporting obligation 2028 for 2027).
No increase in the audit intensity of Limited assurance/Limited assurance to reasonable assurance.
The double materiality analysis remains at the core of sustainability reporting.
One Adjustment of the value chain cap“ is provided for. Companies subject to reporting requirements may therefore only request information from companies with fewer than 1,000 employees from their value chain that is required by the VSME Standard are included. This was published by EFRAG in 2024 and is intended to serve as the basis for voluntary sustainability reporting. The VSME standard is intended to limit the amount of information collected between companies.

ESRS proposals

The standards are to be revised in the coming months in order to simplify the overall work:

More precise definition of requirements
Reduction of data points and differentiation between voluntary and mandatory data points
Prioritising quantitative over qualitative key figures
Improving interaction with other legislation
Sector-specific ESRS are cancelled.

EU taxonomy proposals

The The group of companies with a taxonomy reporting obligation will be changed:
- The taxonomy information only has to be disclosed in full by CSRD-reportable companies with turnover > EUR 450 million. Disclosure of the OpEx KPI can be omitted if the proportion of taxonomy-eligible turnover is < 25 % of total turnover.
- CSRD-reporting companies with < 1,000 employees can voluntarily provide taxonomy information. However, the sales KPI and CapEx KPI must be disclosed (OpEx KPI can be omitted).
- Simplified voluntary taxonomy reporting is provided for companies with < 1,000 employees and turnover < EUR 450 million.
A Materiality concept is to be introduced, including the DNSH (“Do no significant harm”) criteria and reporting forms are to be simplified.
Simplifying the green asset ratio (GAR) of banks by eliminating the inclusion of companies with <1,000 employees.

CSDDD suggestions

The Staggered initial application is to be postponed by one year (July 2027).
The due diligence obligations should only apply to Direct business relationships no longer have to focus on the entire value chain. Due diligence obligations towards indirect business partners should only apply if there are concrete indications of negative impacts. As a proposal, companies should have to obtain contractual assurances from their direct business partners to ensure that they in turn comply with a code of conduct.
A commitment to a Cancellation of business relationships should no longer exist.
The Monitoring of business relationships and the evaluation of the effectiveness of the measures taken will no longer have to take place annually, but probably only every five years.
The Civil liability is to be cancelled and the penalties determined by national supervisory authorities.

When will changes actually be implemented?

The published proposals can be found still at the draft stage. Before publication in the Official Journal of the EU, the directive must still pass through the legislative process in the European Parliament and the Council of the EU. According to the proposal, the draft for the postponement of first-time application is to be transposed into national law by the end of 2025, while the adaptation of the substantive aspects is to be implemented within one year of entry into force.

Now that the existing version of the CSRD has already been transposed into law in some countries (unlike in Austria with the delay of the NaBeG), the question arises as to how quickly they can still incorporate an adaptation into national legislation in order to prevent the de facto reporting obligation for 2025. Limiting the group of users and postponing the reporting obligation by individual member states is also possible in principle.

The assumption that it may take six to twelve months for changes to be implemented at EU level seems realistic from today's perspective.

Reflections on the changes

As the reporting obligation under the current CSRD has applied to most of the companies concerned since the beginning of 2025, many companies across Europe have invested heavily in order to fulfil the legal requirements. One Disadvantage due to the proper implementation of the obligation in comparison to those who have not yet taken adequate care of it would be difficult to justify.

The new regulations lead in part to a systematic favouring or disadvantaging of certain sectors. For example, socially active organisations would still tend to fall under the obligation due to their personnel intensity and higher number of employees despite lower turnover, while companies in the real estate sector could be exempted from the reporting obligation due to their lower number of employees and high turnover.

As these are proposals, adjustments are likely to be made during the legislative process. For example, the increase in the threshold regarding the number of employees to 1,000 is certainly subject to some discussion. There are indications from the member states that a finalised threshold could be lower than the one now proposed. With all of the above proposals, there is No legal certainty yet.

A postponement due to these or similar changes is favourable to many companies, as some are not on schedule for implementation. However, the extent of a postponement and a change in the extent to which companies are affected is not certain. Clear clarity is not expected for several months. For this reason, it is recommended that the current situation is not understood as a complete pause or shutdown of the process, but rather a Possible extension of time used sensibly for considerations and implementation is to become.

The Upgrading the voluntary VSME standard should be included in the considerations on sustainability reporting. It is possible that this less complex standard is the one that will affect a large proportion of companies that have been required to report on CSRD in the future. The materiality analysis remains of central importance in this standard, as do the ESG sustainability topics.