”The Future of European Competitiveness”, as Mario Draghi phrased it, rests on the ability to reach NetZero and decarbonisation targets without the undue burden of excessive sustainability reporting.
For those who watched today’s press conference on the Omnibus simplification package and later also read the full proposal, one message above others was clear: the war in Ukraine has simultaneously shifted and refocused the EU’s immediate priorities. Higher energy prices and energetic dependencies must be counteracted. Phasing out Russian gas imports while increasing the Union’s share of renewables is now more crucial than ever. So how has this affected sustainability reporting?
The present and the future of CSRD
Most European undertaking currently in scope of CSRD for FY 2024 will find nothing has substantially changed: they are still expected to turn in their numbers and publish their Annual Reports by April 2025.
It is the undertakings slotted to be in scope next year and in 2027 that have been relieved of their obligations, under a Stop the Clock proposal. If it is approved by the EP, the CSRD would only be mandatory to large undertakings (>1000 FTE and either a turnover above EUR 50 million or a balance sheet above EUR 25 million).
For undertakings out of scope, the EC outlines the use of a future voluntary standard based on the VSME that EFRAG had already developed. Regarding the ESRS, sector-specific reporting standards would be out of the picture, therefore substantially decreased the number of data points required.
Taxonomy to become a point of distinction for environmentally sustainable companies
The proposal creates an “opt-in” regime whereby large undertakings (>1000 FTE) and a net turnover not exceeding EUR 450 million claiming their economic activities are fully or partially aligned with the EU Taxonomy shall disclose their turnover and CapEx KPIs (with OpEx becoming an optional disclosure). This means that reporting on Taxonomy will become even more relevant for companies specifically wishing to market their business as being future proof and aligned with the NetZero goal.
The future of CSDDD
The omnibus proposal would delay the first phase of the entry into application of the CSDDD by one year (2028), thereby postponing the transposition deadline for Member States by one subsequent year as well.
Importantly, undertakings in scope of both the CSRD and the CSDDD will not be required to report any additional information beyond what is required by the CSRD.
Final remarks
The Omnibus proposal discussed and presented by the European Commission today will now move through a Fast Track procedure, meaning it will next be subject to a vote in the European Parliament. If rejected by the EP, the Omnibus would then be returned to the Commission for amendments.
Have questions about how the Omnibus proposal might impact your business? Contact us to discuss what these changes mean for your reporting and compliance strategy.
