Omnibus package – Amendments proposed to CSRD, CSDDD, CBAM and Taxonomy consultation

The eagerly awaited omnibus package on sustainability has been published by the European Commission. This package contains proposals to amend the following existing legislation:

1. the Corporate Sustainability Reporting Directive (CSRD) by way of two amending Directives
2. the Accounting Directive by way of an amending Directive
3. the Audit Directive by way of an amending Directive
4. the Corporate Sustainability Due Diligence Directive (CSDDD) by way of two amending Directives
5. the Carbon Border Adjustment Mechanism (CBAM) by way of an amending Regulation
6. the InvestEu Regulation by way of an amending Regulation

as well as launching a consultation process on a draft Taxonomy delegated act.

In this brief update, we focus on the key amendments proposed to CSRD with a more detailed analysis of the proposed amendments to CSRD and the other pieces of legislation to follow in the coming days. It is important to note that the publication of these proposals is only the start of the EU’s legislative process with amendments likely before the final text is agreed by the European Parliament and Council.  

Timing

While the proposal dealing with substantive changes to CSRD, the Accounting Directive, the Audit Directive and CSDDD is being negotiated, a second proposal has also been published aiming to:

1. postpone the application of the sustainability reporting obligations for those required to comply with sustainability reporting obligations in respect of their 2025 or 2026 financial years by two years to 2027 and 2028 respectively and
2. extend the deadline for member states to introduce legislation implementing CSDDD by one year to 26 July 2027 and introduce new thresholds

According to the Commission, the purpose of this second proposal is to avoid a situation where undertakings are required to commence reporting in respect of financial years 2025 or 2026 under existing requirements but will ultimately be exempt from mandatory sustainability reporting if the proposed amendments remain unchanged. The Commission has requested that the European Parliament and Council move quickly to consider this proposal in order to give certainty to those preparing to report for the first time in respect of their 2025 financial year. Member states will then be required to introduce implementing legislation giving effect to these changes.

Thresholds

It is proposed to amend the thresholds for falling within scope of the sustainability reporting obligations so that such obligations only apply to large undertakings or groups with more than 1,000 employees. This means that only undertakings or groups that have either (i) net turnover greater than €50m or (ii) a balance sheet total greater than €25m; and more than 1,000 employees will be subject to mandatory sustainability reporting obligations. For those no longer required to mandatorily report, a form of the voluntary SME (VSME) standards developed by EFRAG will be adopted as a delegated act with its use to be encouraged.

Increases to the thresholds for third country undertakings are also proposed with the net turnover relating to an in scope branch increased from €40m to €50m and the threshold for net turnover generated in the EU increased from €150m to €450m.

Value chain cap

Those required to comply with the sustainability reporting obligations will be limited in the type of information that they can request from those in their value chain with less than 1,000 employees. It is proposed to limit this to the information specified in the VSME standards and any additional sustainability information that is commonly shared between undertakings in the sector concerned.

Taxonomy disclosures

Flexibility is being introduced in reporting on Taxonomy alignment for in scope undertakings with a net turnover not exceeding €450m.  

Amendments to the European Sustainability Reporting Standards

In addition to adopting the VSME standards, the Commission proposes deleting the requirement for sector specific and listed SME standards. The Commission has also indicated that it intends to adopt a delegated act to amend the European Sustainability Reporting Standards to substantially reduce the number of mandatory datapoints.  

For further information on these developments, please contact Jill Shaw, ESG & Sustainability Lead or any other member of the ALG ESG & Sustainability team.

Date published: 26 February 2025