CSRD Overhaul? What changed and what's the same.

The European Commission's "Omnibus" package proposal has introduced significant potential changes to the Corporate Sustainability Reporting Directive (CSRD). These changes have global implications, impacting companies directly in scope, those with EU supply chains, and those benchmarking against international best practices. At Diginex, we're helping organizations worldwide understand these shifts. This article breaks down the proposal, focusing on what's changed and what remains constant.

BACKGROUND: A "Streamlining" Proposal with Global Reach

Published on February 26, 2025, the Omnibus Bill aims to streamline EU sustainability laws. Remember, this is a proposal, subject to negotiation and amendment. This creates uncertainty, particularly relevant for any company with EU operations, significant EU-based supply chains, or those looking to global sustainability leadership. A key element of the package is to delay waves 2 and 3 of implementation.

WHAT CHANGED

The proposed changes are substantial and could significantly alter the reporting landscape:

• Dramatically Increased Scope Thresholds: This is the most significant change. The proposal greatly increases the size thresholds for companies directly required to report under the CSRD. EU Companies/Groups: Would need to exceed two of the following: Balance sheet total: €25 million Worldwide net turnover: €50 million Average employees: 1,000 (up from 250)

OR

• EU entities with 1,000 employees and exceeding one of the following: Balance sheet total: 25 million euros Worldwide net turnover: 50 million euros
• Non-EU Ultimate Parent Companies: Would need to both: Generate a net turnover of at least €450 million in the EU (at the group level) – up from €150 million. Have at least one large EU subsidiary (meeting the revised EU company thresholds) or a branch in the EU with a net turnover of €50 million (up from €40 million). These new thresholds would also apply to companies listed on EU regulated markets, credit institutions and insurance undertakings
• Higher Thresholds for EU Taxonomy Alignment Disclosures: Only EU companies/groups exceeding a €450 million net turnover would be required to provide full EU Taxonomy alignment information.
• Value Chain Reporting Shift: Companies would be encouraged to use "voluntary" standards (based on EFRAG's VSME standard) for data from value chain partners not directly subject to the CSRD.
• No Reasonable Assurance Standards: The proposal removes the previous requirement for the Commission to adopt reasonable assurance standards, keeping the level at "limited" for the foreseeable future.
• ESRS Revisions: The Commission intends to revise the European Sustainability Reporting Standards (ESRS) to reduce mandatory data points and improve clarity.
• Sector-Specific Standards Scrapped: The proposal eliminates the requirement for sector-specific reporting standards.

WHAT STAYED THE SAME

Despite these significant proposed changes, some core principles of the CSRD remain unchanged:

• Double Materiality: The fundamental concept of double materiality – assessing both the financial impacts of sustainability matters on the company and the company's impact on people and the planet – is unchanged. This remains a cornerstone of the CSRD and a global best practice.
• Limited Assurance Requirement (for Now): The requirement for limited assurance on CSRD reports remains in place, although with planned guidance from the Commission to clarify procedures.
• Underlying Drive for Transparency: The fundamental goal of the CSRD – to increase transparency and comparability in sustainability reporting – remains. The direction of travel, towards greater corporate accountability, is unchanged, even if the specific implementation details are being adjusted.

WHAT diginex RECOMMENDS

At Diginex, we believe it's crucial to recognize that the underlying principles and best practices embodied by the CSRD remain incredibly important, regardless of whether your company falls directly within the revised scope. The push for greater transparency and accountability in sustainability is a global trend, driven by investors, customers, and increasingly, by supply chain partners. Don't be surprised if, even after these proposed changes, your larger suppliers, customers, or investors continue to expect a level of disclosure and performance that aligns with the spirit of the CSRD.

Proactive engagement with these principles provides a competitive advantage, builds resilience, and prepares your company for the evolving expectations of the global market. Companies in the second and third waves should still take this opportunity to delay by two years. Therefore, continuous monitoring of developments, assessing your company's direct and indirect exposure, and benchmarking your practices against the CSRD framework are all vital steps.