The European Commission (EC) has proposed several legislative measures, referred to as the Omnibus package, that are intended to significantly reduce the requirements of due diligence and sustainability reporting.
In essence, changes are proposed both in the contents of the directives, as well as the dates of their application.
Postponement of implementation dates
The proposal intends to postpone by two years the implementation dates of the reporting requirements based on the current CSRD for the second wave of entities (large undertakings not included in the first wave) from 2025 to 2027 and for the third wave (listed SMEs, small credit institutions and certain insurance and reinsurance undertakings) from 2026 to 2028. The postponement is intended to avoid a situation where entities would be required to report for the financial year 2025 (second wave) or 2026 (third wave) and then be relieved of this obligation.
Proposed amendments to the Corporate Sustainability Reporting Directive (CSRD)
The new package proposes to change the scope of entities that must apply the CSRD. The CSRD would now apply to entities with an average of more than 1,000 employees as of the balance sheet date and with a net turnover exceeding EUR 50 million or total assets exceeding EUR 25 million. The same requirements would apply to parent companies of groups that meet these criteria on a consolidated basis. Entities that do not meet the number of employees criterion and one of the financial criteria would no longer be required to report on sustainability under the CSRD. For these entities, the EC will adopt a delegated act with a voluntary reporting standard based on the voluntary standard for small and medium-sized enterprises (SMEs) published by EFRAG in December 2024 (VSME).
The EC is also striving to reduce the “trickle down” of reporting obligations from larger to smaller entities. Based on the proposals, the reporting entity would not be allowed to request information from entities in its value chain beyond the information specified in the voluntary standard, unless these entities are themselves obliged to report under the CSRD.
The proposals also include the commitment to revise the delegated act establishing the European Sustainability Reporting Standards (ESRSs) with the aim of substantially reducing the number of data points that entities have to report, clarifying unclear provisions and improving consistency with other pieces of legislation. The EC is striving to prevent further increases in sustainability reporting costs and will therefore no longer consider the introduction of a reasonable assurance requirement (retaining the limited assurance requirement) or sector-specific standards for sustainability reporting.
Proposed amendments to the Corporate Sustainability Due Diligence Directive (CSDDD)
The Omnibus package also proposes changes to the requirements of the CSDDD. Based on the proposals, these requirements have been substantially simplified and reduced. The implementation date of the CSDDD has been postponed by one year to 2028.
Changes to EU taxonomy
The proposals introduce an “opt-in” regime for the EU Taxonomy Regulation that will entirely eliminate the costs of taxonomy reporting compliance for large undertakings with over 1,000 employees on average and a net turnover of less than EUR 450 million that do not claim that their activities are associated with economic activities that qualify as environmentally sustainable under the EU Taxonomy Regulation.
Other changes include simplifying reporting templates, introducing a materiality threshold for companies with less than 10% of eligible activities, introducing a partial disclosure option to foster transition financing, simplifying and making more useful the Green Asset Ratio used by banks, reducing the scope of mandatory reporting on operational expenditure and simplifying certain “do no significant harm” (DNSH) criteria.
The EC’s proposals will be presented to the European Parliament and the Council of the European Union for review under the EU’s regular legislative procedure, which may lead to changes to the proposals. The postponement of reporting obligations will be approved in an urgent procedure.
A public consultation is currently underway. The comment period for this consultation ends on 26 March 2025. It will be followed by a “trialogue” where the European Commission, the Council of the European Union and the European Parliament will try to reach a version on which there is consensus.
Discussions on the final form of the amendments could take more than a year. Therefore, the EC is seeking to have the proposal to postpone the reporting obligations by two years approved as a matter of priority in an urgent approval procedure. According to the EC, this approval is expected to take place in April-May 2025.
After the final approval of the proposed changes and their adoption by the European Parliament, the legislation would enter into force upon publication in the Official Journal of the EU and would have to be transposed into national laws of the member states. In this case, the amendments would apply from 2028 for reports for the 2027 financial year.
The Czech Accounting Act so far includes only the obligations for the first wave of companies, namely large public interest entities. The second and third waves are part of the draft amendment that has not yet been approved. At present, it is not entirely clear whether it will be approved in the original wording or whether it will reflect some of the changes proposed as part of the Omnibus, particularly the two-year postponement, if the European Parliament passes it in time.
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