European Commission proposes a raft of changes to sustainability regulations

February 28, 2025

The European Commission has proposed a series of reforms to its sustainability regulations, aimed at reducing red tape and streamlining rules for EU businesses.

The Omnibus Package seeks to postpone reporting obligations under the Corporate Sustainability Reporting Directive (CSRD), push back the implementation of the Corporate Sustainability Due Diligence Directive (CSDDD) and reduce the number of companies affected by the rules.

The CSDDD aims to promote sustainable and responsible corporate behaviour both in companies' operations and throughout their global value chains.

The Commission has proposed extending the transition deadline by one year to July 2027 and delaying the application date for the first wave of companies to July 2028, allowing businesses more time to prepare.

It has also suggested scrapping the requirement to implement climate transition plans. Instead, businesses would only need to outline their planned measures for achieving climate goals, which would align the requirements with the current CSRD reporting obligations.

The CSRD seeks to enhance the availability and reliability of sustainability information while fostering a culture of transparency regarding companies' impact on people and the environment.

The Commission has also proposed a two-year delay to the CSRD's implementation. As a result, certain EU and non-EU issuers, along with large companies with 500 employees, will now have until 2028 to report instead of this year.

This same delay would also apply to large companies who were due to report under the second wave from 2026.

The thresholds would be updated to better align with the scope of the CSDDD. Under the new rules, they would apply only to EU large undertakings with an average of over 1,000 employees, a net turnover exceeding €50 million, or a balance sheet exceeding €25 million

Similarly, EU parent undertakings with large groups meeting the same employee and turnover or balance sheet criteria would also fall under the rules.

For companies no longer within the scope of the CSRD - those with up to 1,000 employees - the commission has proposed introducing voluntary reporting standards tailored for SMEs.

It has also recommended that SMEs should be protected from "disproportionate sustainability information requests" when they are included in the value chain of larger companies which fall within the scope of CSRD and CSDDD.

The Commission has suggested significantly restricting the application of the EU Taxonomy regulation's reporting requirements, limiting them to in-scope entities with a turnover exceeding €450 million. For all other in-scope entities, taxonomy reporting would be voluntary.

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