Understanding CSRD and Exploring the Omnibus

The Corporate Sustainability Reporting Directive (CSRD) should be more than just a regulatory checkbox. For forward-thinking organisations, it represents an opportunity to drive value, strengthen stakeholder relationships, and position themselves as leaders in a rapidly evolving market. By approaching CSRD as a strategic tool rather than a compliance exercise, businesses can unlock insights, enhance decision-making, future proof their business, and demonstrate their commitment to sustainability.

When supporting our clients, we emphasise the importance of leveraging CSRD to add tangible value which requires them to go beyond simply complying with the regulatory requirements.? For example, we have witnessed clients rethink relationships with their surrounding communities on the back of results of double materiality assessments, which has helped them improve their brand’s reputation.

This exercise can often feel overwhelming, particularly when trying to keep up with the shifting regulatory landscape.? While best practices are still emerging due to the directive's relative infancy, examples of successful implementation do exist. Learning from these successes, whilst keeping an eye on the horizon for the next development in the regulatory landscape, is essential for long-term success.

Turning Costs into Value Creation

Establishing CSRD-compliant reporting frameworks involves investment—both in terms of time and resources. However, businesses can pivot these costs into value creation by:

• Building Operational Efficiency: Sustainability data can help to identify inefficiencies and cost-saving opportunities, such as reducing energy consumption or optimising supply chains.
• Enhancing Brand Reputation: Transparency and proactive reporting can position the company as a leader in responsible business practices, fostering customer loyalty and enhancing market differentiation.
• Accessing New Markets and Capital: Complying with CSRD signals to investors and partners that the company is forward-thinking and committed to sustainability, opening doors to ESG-focused funding and new business opportunities.

?The Omnibus Explained: CSRD, CSDDD, and Taxonomy Implications at a Glance

The European Union is discussing bold steps to simplify and consolidate ESG reporting regulations. The proposed omnibus framework—if adopted—aims to integrate CSRD, the EU Taxonomy Regulation, and the Corporate Sustainability Due Diligence Directive (CSDDD/CS3D) into a single, streamlined system. The?“Omnibus simplification package”?is expected to be published on?26 February 2025.? This initiative is intended to reduce the reporting burden on businesses while maintaining high sustainability standards. Whilst some have welcomed this streamlined approach, critics have described it as a rollback that could potentially weaken the ESRS framework, reducing reporting requirements, which may affect the credibility and comparability of sustainability disclosures.?

The European Financial Reporting Advisory Group (EFRAG) has called for clarity on how the Omnibus Package will impact its European Sustainability Reporting Standards (ESRS), which form the foundation of the CSRD. EFRAG's standards were developed to align with the EU Taxonomy and support double materiality reporting. If simplification efforts weaken the ESRS framework or reduce reporting requirements, it may affect the credibility and comparability of sustainability disclosures.

It is unclear how an omnibus legislation will work, given that CSRD, CS3D and the Taxonomy Regulation don’t fit neatly together: they are a combination of regulations and directives, with applicability to different sets of companies, and they sit under different Commission mandates.

These issues reflect the complexity of balancing regulatory simplification with the EU's ambitious sustainability goals.