New sustainability requirements: EU omnibus initiative facilitates CSRD & CSDDD

On February 26, 2025, the EU Commission proposed to amend the CSRD (Corporate Sustainability Reporting Directive) and the CSDDD (Corporate Sustainability Due Diligence Directive) as part of its omnibus initiative to simplify and reduce the administrative burden of reporting requirements for companies. The aim of the changes is to reduce the administrative burden on companies and to make the requirements easier to implement. The new regulations are intended to streamline reporting processes, reduce overlaps and create more practical due diligence requirements. But what does this mean for companies in concrete terms? Below you will find an overview of the most important proposed amendmentsand and their effects.

1. Amendments to the Corporate Sustainability Reporting Directive (CSRD)

Adjustment of the thresholds

In order to enable a better distinction between large and medium-sized companies, the thresholds for the reporting requirement have been revised:

Only companies with more than 1,000 employees and either a turnover of more than 50 million euros or a balance sheet total of more than 25 million euros are required to report. As a reminder, the old version of the directive included a phased introduction of reporting requirements for listed SMEs and small, non-complex credit institutions.

This would reduce the number of companies required to report by 80%.

Reporting standards

ESRS (European Sustainability Reporting Standards) will remain relevant for companies with reporting requirements. In contrast, industry-specific standards, some of which are still in the draft stage, will no longer apply. For companies with voluntary reporting requirements, the EU Commission recommends the VSME standard, which was originally intended exclusively for SMEs.

What will change for SMEs?

• No reporting requirement for listed SMEs: Small and medium-sized enterprises (SMEs) are exempt from the reporting requirement. The reporting requirement for listed SMEs has been cancelled.
  
  
• Reduction of information requirements and avoidance of the ‘trickle-down’ effect: Large companies may not request information from SMEs in their value chain that goes beyond the information specified in the voluntary standards, unless this information is necessary and cannot reasonably be obtained by other means.

These adjustments are intended to ensure that SMEs are not disproportionately burdened, directly or indirectly, by sustainability reporting and that their competitiveness is maintained.

What can companies do now?

The envisaged easing of reporting requirements does not mean the end of corporate sustainability. Various stakeholders such as banks, insurance companies, rating agencies etc. will continue to demand ESG information. Companies that act now will remain more resilient in the long term, more attractive to stakeholders and therefore more economically successful. Those that have already set out to implement the CSRD in its current version and have carried out a double materiality analysis (DWA) in accordance with ESRS can use the insights gained to make their sustainability strategy more robust and precise.

The VSME offers a practicable, less bureaucratic solution with two optional modules to fulfil basic stakeholder requests. Both the EU Commission and numerous sustainability experts recommend companies to use the VSME as a less time-consuming entry into sustainability reporting and to strengthen their own competitive position with the report. 

2. Amendments to the Directive on corporate sustainability due diligence for sustainable supply chains (CSDDD)

• Value chain: Due diligence should focus primarily on a company's own operations, subsidiaries and direct business partners (Tier 1). Companies will only need to look beyond direct business partners if there is plausible information about adverse impacts. The requirement to end business relationships as a last resort has been removed.
  
  
• Stakeholders: The definition of ‘stakeholders’ has been simplified and limited to directly affected individuals and communities.
  
  
• Review cycle: The intervals for the regular review of due diligence measures have been extended from one year to five years.
  
  
• Liability: Civil liability has been adjusted to avoid excessive compensation.
  
  

What happens next?

The European Commission's proposed amendments must first be approved by the European Parliament and transposed into national law. You can find all the details of the amendment initiative of the EU Commission here.

By the way, the term ‘omnibus’ initiative refers to a legislative package that combines several different but thematically related regulations into a single measure. In EU legislation, ‘omnibus’ is often used when various existing directives or regulations are amended or supplemented at the same time.

Our offer

Do you have questions about the current proposed amendments and existing reporting obligations or would you like to report voluntarily in accordance with the VSME? Are you interested in a double materiality analysis as a basis for your sustainability strategy? 

We will be happy to help you - feel free to contact us and get in touch!

 Text: Olga Schmidt