How are EU sustainability reporting rule changes likely to impact you?

Why the updates?

There has been pressure on the EU to reduce the costs of compliance for businesses impacted by the rules, particularly smaller companies. The EU Commission hopes the Omnibus proposals will create savings in annual admin costs of around €6.3 billion.

What are the main changes to be aware of?

CSRD

• Around 80% of companies are set to be removed from the scope of CSRD; only companies with over 1,000 employees and either €50M+ turnover or €25M+ assets fall under the new threshold. Voluntary reporting by smaller companies will still be encouraged.
• The Commission proposes to postpone compliance for second and third wave companies by two years. This will affect those reporting on FY2025 and beyond.
• The number of ESRS data points required to be disclosed under the CSRD will be reduced. Exact details of this are still to be announced.
• Sector-specific standards will be removed, significantly reducing the overall reporting burden.
• The need for ‘reasonable assurance’ will be removed, although the need for limited assurance stays (as does the need for a Double Materiality Assessment).

CSDDD (Corporate Sustainability Due Diligence Directive)

• The CSDDD will require businesses to disclose how they manage and address human rights and environmental risks in their value chains. It’s proposed the compliance deadline for CSDDD is pushed back by one year to 2028 and the scope is narrowed to assess direct business partners only.
• Under the proposals, companies will need to conduct due diligence assessments every five years rather than annually.

EU Taxonomy

• The EU Taxonomy identifies environmentally sustainable activities, requiring businesses to report the share of their revenue, capex, and opex linked to these activities.
• Under the proposals the EU Taxonomy will now only be mandatory for companies with over 1,000 employees or €450 million turnover.

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