The Corporate Sustainability Reporting Directive (CSRD), proposed by the European Financial Reporting Advisory Group (EFRAG), was adopted in July 2023.

Implementation will begin in January 2024 for the reporting year 2025. Reporting will be on a rolling basis depending on the size and location of companies.

In 2025, 50,000 European companies will have to comply with the CSRD. One of the key aspects of the CSRD is the concept of “double materiality”.

Double materiality refers to the intersection of issues that hold economic significance for a company and those that are pertinent to external stakeholders.

On February 26th, the European Commission released its omnibus proposal to streamline a collection of EU Green Deal regulations, primarily the CSRD, the CSDDD, CBAM, and the EU Taxonomy, in an effort to reduce the regulatory burden on businesses working toward sustainability goals.

Sustainability teams should stay the course. Continue refining data strategies, advancing double materiality assessments and engaging suppliers to ensure reporting remains adaptable.

Nevertheless, if the Omnibus is approved, the reduced reporting burden could free up time and resources – allowing firms to shift focus from compliance to sustainability innovation.

• Changes CSRD thresholds to focus on larger enterprises and make reporting voluntary for smaller companies
• Simplifies the CSRD’s technical reporting standards, to focus on quantitative disclosures
• Proposes a two year reporting delay for companies in wave 2 and beyond, so that companies have time to adapt to the new rules

The Omnibus is still just a proposal – it must go through the EU’s legislative process, which could take months or longer.

Until finalized, existing regulations remain in force, particularly in countries where the CSRD has already been transposed into national law. Organizations must continue preparing for the CSRD and CSDDD as they currently stand.