From stop-the-clock to ESRS revision: current status of the Omnibus initiative on sustainability reporting

The overarching aim of the Omnibus initiative is to strengthen the competitiveness of the European Union. This is to be achieved in particular by reducing bureaucracy. The first omnibus package published on February 26, 2025, marks the beginning of a series of five packages announced to date, which, in addition to sustainability, are also intended to address legislation on investment instruments (also published on February 26, 2025), small-mid cap companies, defense and agriculture.

In order to understand the current developments in relation to the first Omnibus package, it is important to distinguish between the draft Amending Directives contained therein, each of which entails separate legislative procedures:

The ESG reporting obligations under the CSRD, EU Taxonomy and CSDDD are addressed in the two Amending Directives 80 and 81. It should be noted here that the two directives are being negotiated independently of each other and therefore, for example, the postponement already decided by Amending Directive 80 (Directive (EU) 2025/794) will initially also affect companies that would no longer be part of the CSRD user group under Amending Directive 81 (e.g. capital market-oriented SMEs). The question of which companies will have to report and when will only be answered in detail by combining the two final directives.

On April 3, 2025, the European Parliament decided to postpone the dates of first-time ap-plication for companies in the CSRD and CSDDD user group. After the Council had already approved the legislative text on March 26, 2025, its necessary approval was merely a formality and finally took place on April 14, 2025.

Following the publication of Directive (EU) 2025/794 (formerly Amending Directive COM(2025) 80) in the Official Journal of the EU on April 16, 2025, it came into force on the following day and must be transposed into national law by the Member States by December 31, 2025.

For companies within the current scope of application of the CSRD, the following changes apply:

The deadlines have also been postponed for certain companies within the scope of the CSDDD: large companies with more than 5,000 employees and a turnover of over 1.5 billion euros must comply with the new due diligence obligations from 2028 (instead of 2027 as previously). Member states will be given one year more, until July 26, 2027, to transpose the CSDDD into national law.

While the Directive on the postponement was adopted quickly and without any notable controversy as planned, the Amending Directive 81 amending certain sustainability reporting requirements and due diligence obligations is currently still in the trilogue process. Part of the debate in the EU Parliament and Council of the EU is, among other things, the planned increase in the thresholds above which a company is obliged to report on sustainability. The proposal from February 26, 2025, stipulates that in future, only companies with more than 1,000 employees will have to submit a CSRD-compliant sustainability report. This would be equivalent to a reduction in the user group of around 80 %. It remains to be seen to what extent the trilogue procedure will result in changes to the EU Commission's draft and when the procedure will be completed.

The omnibus package also provides for the existing ESRS to be revised in order to achieve simplifications, for example by reducing the number of mandatory data points, clarifying definitions or adapting the structure and presentation of the standards. In a letter dated March 27, 2025, the European Commission mandated the European Financial Reporting Advisory Group (EFRAG), which had already developed the current version of the ESRS, to do this. The timetable set by the EU Commission is tight: the drafts for the revised ESRS are to be submitted to the Commission by October 31, 2025.

On April 8, 2025, EFRAG launched a public consultation in which all stakeholders have the opportunity to submit concrete proposals for revising the standards until May 6, 2025. According to the press release, the consultation complements a series of interviews and workshops that EFRAG is organizing in parallel with reporters, auditors and users of the reporting.

EFRAG adopted a detailed work program on April 25, 2025, and submitted it to the EU Commission with the aim of being able to present the drafts (so-called “Technical Advice”) by October 31, 2025. According to this, the first drafts of the revised ESRS (“exposure drafts”) are to be published at the end of July and submitted for a 30- to 45-day public consultation in August and September. The consultation is to be supplemented by a series of around ten structured public feedback events.

This procedure deviates from the usual process due to the special circumstances. Overall, the timetable must be regarded as ambitious. EFRAG would like to point out that it will remain in close contact with the EU Commission in this regard. Should additional leeway arise in the course of the legislative process, a longer public consultation could therefore also be considered.

In addition to changes to the content of the CSRD and CSDDD, specific proposals to amend the reporting obligations in accordance with the EU Taxonomy Regulation were also published as part of the Omnibus package. These were open for public consultation until March 26, 2025, and, according to the EU Commission, should be adopted by June 2025. It remains to be seen whether this timetable can be adhered to. A comprehensive overview of the planned changes to the EU taxonomy can be found here.

Companies in waves 2 and 3 will gain more time to set up robust reporting processes for targeted and strategically valuable sustainability reporting as a result of the postponement that has already been decided. This additional time should be used sensibly: By prioritizing data points and work packages in a structured manner, data collection processes can be successively implemented, documented, tested and fine-tuned before the first mandatory content audit has to be carried out.

Even for companies that would no longer be part of the CSRD user group after the planned increase in the threshold values, the following applies: despite current developments, ESG data is increasingly being requested by banks, investors and other stakeholders, meaning that there is hardly any way around preparing a sustainability report. The voluntary standard that the EU Commission wants to adopt on the basis of the VSME standard developed by EFRAG is intended to provide a lean alternative to ESRS reporting in future. Even if the specific form of the voluntary standard is not yet known, companies should use the VSME standard to prepare for voluntary reporting at an early stage in order to be able to meet stakeholder requirements as efficiently as possible in the future.