Omnibus: European Commission Proposes Changes to ESG Reporting
On February 26, 2025, the European Commission introduced a new legislative package called Omnibus, aiming to ease corporate non-financial reporting requirements and postpone it by two years. The proposal includes amendments to several key legal frameworks, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy Regulation, and the Carbon Border Adjustment Mechanism (CBAM).
Companies in the second wave (i.e., large enterprises outside the first wave) will now be required to publish their first ESG reports in 2027 instead of 2025. The third wave (insurance companies, small credit institutions, and listed SMEs) will see its deadline pushed from 2026 to 2028. The goal is to avoid a scenario where entities are obligated to report for the financial year 2025 (second wave) or 2026 (third wave) only to be later exempted.
Narrowing the scope of mandatory reporting entities
The reporting obligation will apply only to entities with more than 1,000 employees on average at the balance sheet date and a net turnover exceeding EUR 50 million or total assets exceeding EUR 25 million. The same criteria will apply to parent companies that meet these criteria on a consolidated basis. Entities that do not meet the employee threshold and one of the financial criteria will no longer be required to report under CSRD.
Support for voluntary reporting
For businesses that will no longer be required to report under CSRD, the European Commission plans to adopt a delegated act standards, based on the voluntary standard for small and medium-sized enterprises (VSME introducing a voluntary reporting).
Simplification and clarification of ESRS
Sustainability reporting standards will be revised and simplified, significantly reducing the number of data points, clarifying ambiguous requirements, and improving consistency with other legislations.
Limiting information from the value chain
Under the new proposal, large companies will no longer be able to transfer their reporting obligations to smaller entities that are not required to report under CSRD.
Maintaining limited assurance verification
The proposal removes the consideration of introducing reasonable assurance verification requirements.
Eliminating sector-specific reporting standards
No sector-specific sustainability reporting standards will be developed.
Proposed Changes to EU Taxonomy
Introduction of an "opt-in" regime
The proposal introduces a voluntary reporting system for large companies with more than 1,000 employees and a net turnover of up to EUR 450 million.
Simplification of eligibility and alignment reporting
Further changes include simplifying reporting templates, introducing a materiality threshold for companies with less than 10% of eligible activities, enabling partial disclosures to support transition financing, and enhancing the Green Asset Ratio (GAR) used by banks.
Simplification of some criteria
"Do No Significant Harm" (DNSH)
Next Steps and Legislative Process
Omnibus is now awaiting review by the European Parliament and the EU Council as part of the standard legislative procedure. The two-year postponement of reporting obligations is expected to be approved in an accelerated process by May 2025.
Following the public consultation phase, the legislative process will proceed, with the European Commission negotiating the final proposal with Parliament and Member States. This process may take more than a year. Once the proposed changes are approved and voted on by the European Parliament, the legislation will enter into force after publication in the Official Journal of the EU and will need to be transposed into national laws. In this case, the changes would apply from 2028 for reports covering the financial year 2027.
Impact on Czech Accounting Law
The Czech Accounting Act currently only includes requirements for first-wave companies, i.e., large public interest entities. The second and third waves are part of a proposed amendment that has yet to be approved. At this stage, it is unclear whether it will be passed in its original form or if it will already reflect some of the proposed Omnibus changes, particularly the two-year postponement, if approved by the European Parliament in time.
