Omnibus proposal of the European Commission

Legislative proposal: Omnibus simplification package

On February 26th, the European Commission (EC) published a legislative proposal to significantly amend recently adopted sustainability regulations: the Omnibus simplification package. This proposal was put forward by the EC and will require adoption by the European Council and the European Parliament, before changes are also implemented by EU member states.

The most important elements of the current legislative proposal are: 

1. Change to the scope of CSRD to require companies with 1000 employees (increased from 250 employees) and either 50 million in turnover or 25 million in balance sheet total. This may lead to a reduction of approximately 80% in the number of companies in Europe that are obliged to comply with these directives. 
2. For smaller organisations, the proposal includes the option of voluntary reporting. The Voluntary Standards for SME’s (VSME) could be used for that. 
3. Postponement of the CSRD reporting obligation for two years for Wave 2 (currently 2026 reporters) and Wave 3 (currently 2027 reporters) entities. 
4. The development from limited assurance to reasonable assurance over time is no longer part of the proposal. However, a proposal has been made for "targeted limited assurance" (a new form of limited assurance). 
5. Change to the scope of EU Taxonomy to align with CSDDD eligibility (i.e. 1000 or more employees and €450 million or more in turnover). 
6. Postponement of the transposition deadline for CSDDD by 1 year, as well as a similar postponement of reporting obligation by 1 year to July 2028.  
7. Simplifying requirements within the CSDDD, through focusing systematic due diligence requirements on direct business partners. 

The EC has requested a ‘fast track’ for the proposal on delaying the CSRD reporting obligation by 2 years and the CSDDD transposition deadline and reporting obligation by 1 year, however it remains unclear how soon this proposal can be adopted by the European Council and Parliament. 

Want to know more about the details of the Omnibus Proposal?

Proposed changes

Postponement, cancellation or less complexity?

The amendments in the legislative proposal seem to be intended to provide administrative relief for companies. It should become less complex and time-consuming for companies to comply with sustainability legislation. This creates space for companies to think more independently and strategically about their sustainability ambitions and report on them. The focus shifts more towards purpose rather than complex, mandatory reporting.

Organisations can use the extra time to continue working on further developing or updating their sustainability strategy and the ambitions that underlie the reports. We know from experience that it can take multiple reporting periods to effectively organise processes and systems for data collection on sustainability indicators as well as to ensure the quality of sustainability information. It is therefore useful to involve the auditor in the preparatory steps, such as discussing the double materiality analysis (DMA). The reliability of reporting increases when the figures have been audited. Ultimately, the goal is to inform relevant stakeholders so they can make decisions with confidence, which in turn contributes to the company's value creation.

For organisations that had not yet started preparing you are presented with an opportunity to pay extra attention to advancing sustainability plans in a potentially less complex reporting landscape. This will allow focus and investment in sustainability strategy, and ensuring you can align your reporting frameworks to stakeholder needs.

What now? What is certain in these uncertain times?

In the recent period supporting organisations on the implementation of these sustainability guidelines, we have learned a number of important lessons which can be used to keep sustainability and transparency on the agenda.   

Our recommendations

1. Focus on the double materiality analysis (DMA). Many organisations have already carried out a DMA . The principle of double materiality remains a core element of the CSRD and will not be affected by the Omnibus proposal. And this is understandable. It helps organisations to evaluate what sustainability matters are truly material to them. Good sustainability information for strategic planning, reporting, risk and impact management focuses on the most important sustainability-related risks and opportunities and on the sustainability topics with which the organization has the greatest impact on people and the environment. The double materiality principle helps to maintain this focus and contributes to resilience. 
2. Get clarity on the value chain. Value chain responsibility remains a cornerstone of sustainability. Mapping your value chain(s) and understanding what impacts, risks and opportunities may exist both upstream and downstream to your own operations is an insightful and valuable activity for any organisation. Stay in touch with stakeholders and value chain partners. This always yields useful and relevant information that contributes to better risk management and insight into new strategic opportunities. Under CSDDD, companies are still expected to monitor their value chain, and this also applies to indirect business partners if there is information that indicates possible misconducts.  
3. Keep an eye on your own ambitions, goals, and actions. The more concrete an organisation can develop their sustainability policy and measurable objectives and targets, the better they will know what they still need to do. Time and resources can then be used effectively, especially if mandatory reporting potentially receives less attention.   
4. To measure is to know. Continue to collect and monitor relevant ESG data. Without management information, sustainability activities will lack guidance and governance to achieve the organisations strategic goals and initiatives can go in all directions. Data on important topics such as energy consumption, diversity and employee engagement or characteristics of raw materials remain important to have in scope. Where can potential dependencies be identified? Without data, it is impossible to steer and manage.     
5. Reporting helps both internally and externally. Reporting acts as a tool to track progress and keep stakeholders informed about relevant organisational information. The same goes for communication about financial results. So, continue preparing for reporting. Now that the first CSRD reports have been published, many are expected to continue to see the CSRD as the gold standard.
6. Maintain an open dialogue with the auditor and make use of extra time. Entities within scope are required to have their sustainability report audited. However, the proposal considers the level of audit depth, ensuring clarity for the entrepreneur, advisor, and auditor. It is wise to align with the auditor on the reporting approach in a timely manner, regardless of any potential delays. This ensures that adjustments in the CSRD process can be implemented on time. During preparation, this may include the double materiality analysis or other specific data points.

Different groups, opportunities and considerations

We see that different groups of companies, depending on their size and how far they have progressed with their preparations, have different considerations about what the best approach is now or what next steps make sense. In this overview, we have listed the scenarios and considerations per group and provide recommendations about the opportunities and further work on the sustainability strategy and reporting. We also list the developments and opportunities that we see in the field of assurance in sustainability information and reporting.

Would you like to know what we recommend for your company? 

Our recommendations

Positive social impact

The experts at Impact House by Grant Thornton Netherlands have been supporting organisations in the field of sustainability and impact for more than 20 years. We do this because we believe it is important for organisations to understand where key sustainability risks and opportunities lie, and because we are passionate about helping them enhance their positive societal impact. Over the years, we have seen numerous sustainability reporting standards and frameworks for broad value management emerge.

Our auditors not only verify sustainability reports but are also involved in auditing specific sustainability KPIs (such as CO2 emissions). Stakeholders in the value chain may also request assurance on specific data points. For these types of engagements, audit standards are available in the Netherlands. Our auditors are happy to support you. It’s a great starting point for the journey towards a comprehensive sustainability report.

Legislation is not a goal but a means

What is important to remember is that these sustainability guidelines are primarily intended as a means and not as an end. The CSRD, CSDDD and EU Taxonomy have already helped to develop a common standard and new norm for transparency and offer good tools that can help organisations keep track of their own impacts, risks and opportunities. These tools remain relevant and useful.   

The Omnibus proposal clearly states that Europe remains committed to the ambitious goals of the Green Deal, which means that organisations must continue to prepare for a transition to a sustainable economy. This is also captured in the sustainable growth agenda the EC is pursuing. The increasing climate risks for organisations are not disappearing with a change in legislation. 

Developing a sustainability strategy

In recent times, many organisations have worked with us to take important steps towards implementing CSRD, CSDDD and EU Taxonomy. These are guidelines intended to make sustainability efforts more transparent and to get organisations moving in the development of their own sustainability strategies.   

This desire is also driven in part by the financial sector, which needs to know whether the organisations they are investing in are sufficiently aware of their sustainability risks and opportunities and are also taking steps to reduce negative impact. This type of information can still be requested by financial institutions. 

Compliance is not the only reason to work towards future-proof business practices and a sustainable strategy. A large group of Dutch organisations have called for maintaining sustainability legislation, as they recognize that these guidelines support responsible business practices and help their organisations prepare for the future. A perspective we are fully aligned with.

If you have any questions about the content of these changes and what the best next steps are for your organisation, please contact us.  

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