Navigating the EU Omnibus Simplification Package: CSRD

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The EU Omnibus aims to simplify CSRD, reducing compliance burdens and promoting competitiveness among businesses.

In brief

• This is the first of four topical articles (EUTR, CS3D and CBAM) on regulation amendments
• The CSRD aims to enhance transparency and accountability in corporate sustainability reporting, ensuring that companies disclose their ESG impacts.
• Proposed changes include postponed reporting deadlines, revised thresholds for large companies, and reduced reporting requirements for smaller enterprises.
• The directive encourages businesses to integrate sustainability into their operations and respond effectively to stakeholder expectations.

Recap of the legislation

The Corporate Sustainability Reporting Directive (CSRD) is a pivotal element of the European Green Deal, designed to enhance corporate responsibility and facilitate the transition to a sustainable and inclusive economy. Adopted in 2022, the CSRD significantly expands previous sustainability reporting requirements by broadening the range of companies obligated to disclose sustainability information. It also introduces the European Sustainability Reporting Standards (ESRS), which emphasize a double materiality approach. This approach requires companies to report not only on how sustainability issues impact their business but also on the effects of their operations on people and the environment, underpinned by quantitative data. The CSRD took effect in January 2024 for large European public-interest companies, with phased implementation for private companies and non-EU parent companies, including Swiss multinationals.

Proposed changes from the EU Omnibus Simplification Package

The release of the EU’s first Omnibus Simplification Package ( “Omnibus Proposal” or “Proposal”) on February 26, 2025, aims to streamline and simplify sustainability reporting requirements, as just introduced by CSRD.

The Proposal is using a staggered approach. The first step involves a “Stop-the-Clock” measure to postpone the effective dates of requirements under CSRD. In the second step, the European Commission seeks to amend the CSRD more substantively with a separate directive. This directive primarily focuses on simplification, aiming to reduce both the disclosures required and the number of companies subject to mandatory reporting obligations.

Below is a summary of the two directives introduced by the Omnibus Proposal.

“Stop-the-Clock” Directive

At this point, the Stop-the-Clock Directive is no longer a proposal and officially entered into force on April 17, 2025. For companies that have not yet begun reporting, this means that the application of CSRD is postponed by two years:

• Wave 2 (large EU companies): will now report in 2028 in respect of the 2027 financial year (i.e., a 2-year delay from initial 2025 financial year).
• Wave 3 (SMEs): will now report in 2029 in respect of the 2028 financial year (i.e., a 2-year delay from initial 2026 financial year).
• No change for Wave 1 (NFRD companies) and Wave 4 (non-EU companies) due to report for 2024 and 2028 financial years, respectively.

EU Member States are required to transpose this directive into their national law by December 31, 2025.

Directive making substantive amendments to CSRD

While we expect the debate to continue still for several months, the following key amendments are currently being reviewed and discussed:  

• Raising application thresholds: The threshold for large companies has been adjusted to more than 1,000 employees (up from 250 employees) on average, with either a turnover greater than EUR 50 million or a balance sheet greater than EUR 25 million. This applies to both listed and non-listed companies, while listed SMEs are removed from the scope.
• Revisions to the ESRS: The ESRS are currently undergoing revisions aimed at reducing and modifying datapoints, clarifying provisions, and enhancing consistency with other legislations. Public input was gathered in April as part of the consultation process, and EFRAG published a Progress Report on June 20, 2025, detailing the work completed on the project so far. The ESRS Exposure Drafts are expected to be published by the end of July 2025 for additional public feedback and review, with finalization anticipated in October 2025.
• Value chain information: A new “value chain cap” has been introduced to limit the information that reporting entities can request from businesses in their value chain that fall outside the proposed revised scope of the CSRD.