CSRD Simplification Proposed

27 Feb

The EU have announced the Sustainability Omnibus, a package of proposals to “simplify EU rules and boost competitiveness”. It contains major changes to the scopes and impacts of CSRD, CSDDD, EU Taxonomy and the Carbon Border Adjustment Mechanism.

The CSRD changes are particularly relevant as it affected almost every organisation operating in the EU, and thousands were gearing up for mandatory reporting.

CSRD Highlights

Reduced Scope

The leaked headcount threshold increase to 1000 has been confirmed, although the revenue threshold has remained at EUR 50M.
This means CSRD scope will be limited to large companies with 1000+ employees and turnover EUR 50M+ or balance sheet EUR 25M+, in line with CSDDD.
This should result in an 80% reduction in companies in scope for CSRD reporting.

Reporting Postponed

CSRD reporting is postponed until 2028 for companies currently required to report in 2026 or 2027.

Value Chain Cap

Companies not directly in scope for CSRD must only provide simplified data (VSME) to reporting companies

ESRS Standards review

Fewer data points.
Clarification on unclear provisions.
Consistency with other legislation.
Sector-specific standards removed.

EU Taxonomy thresholds have also been aligned, which will similarly result in an 80% decrease in companies required to report.

In Perspective

Based on the current political climate, it seems likely that this proposal will be approved, dramatically reducing the impact of CSRD on businesses. In particular, the reduction in scope of around 80% of companies. Until the proposal is signed into law however, there is a regulatory mismatch for organisations due to report in 2026; in theory they should be collecting data already.

Although Danesmead believe that clarity and transparency is important for business decision-making, it seems clear that the scale of CSRD as previously written was overly onerous on businesses and most corporates will find the changes to be a welcome simplification. We believe there is a need for consistent sustainability reporting standards though ensuring these can be produced in a way that is proportionate and commercially sensitive is a welcome goal.

These changes are fairly major in impact for many organisations operating in the EU. If you would like to discuss this or other regulatory matters further, get in touch.