New amendments to CSRD and CSDD: what to expect from the Omnibus package

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The revision of the directives on sustainability reporting and due diligence is currently being consulted by the European Commission. The DG FISMA, which is drafting the text, has initiated discussions with other key departments, such as DG CLIMA and DG JUST. The debate is heated, as there are differing views on what changes should be made both among the Member States and within the Commission itself. Some countries are pushing for more flexibility, while others are calling for maintaining a strict and binding framework. The overall objective is to strike a balance between sustainability and administrative burden for companies, while ensuring transparent and effective reporting. Decisions taken at this stage will influence the future of business sustainability in the EU and may redefine the way companies deal with their environmental and social

In recent days, a draft of the Omnibus Decree has been circulated, providing a preview of possible regulatory changes. Although the document is not final, it shows the Commission's intention to simplify the reporting obligations and reduce the burden on smaller companies. Among the most important changes are higher thresholds for reporting obligations and greater use of delegated acts, tools that allow the Commission to update requirements without going through a lengthy and complex legislative process. The Commission maintains a high level of confidentiality on these issues, but rumours suggest that the proposed changes could significantly impact the business sustainability landscape, especially for large companies and multinationals active in Europe. It remains to be seen whether these changes will be confirmed or undergo further revisions in the coming months.

Currently, both the CSRD and the CSDD are directives, which means that they have to be transposed into national law through specific legislation. One hypothesis under discussion is whether certain changes could instead be introduced by means of a regulation, a legislative instrument that would enter into force directly in all member states, avoiding delays and possible inconsistencies in implementation. A regulation would ensure greater uniformity in the implementation of the rules, reducing the risk of different interpretations between countries. However, the leaked draft seems to confirm the retention of the directive format, which means that Member States will have a period of about one year to transpose the new provisions. This leaves room for possible national differences in the application of the rules, which could create uncertainty for internationally operating companies.

One of the most discussed aspects concerns the raising of the reporting thresholds for CSRD. According to the leaked draft of the Omnibus Decree, the current criterion defining 'large companies' could be replaced by new parameters based on turnover and number of employees. In particular, the minimum threshold for mandatory reporting could rise to €450 million annual turnover and at least 1,000 employees. This would exclude many medium-sized companies from reporting obligations, while maintaining the constraint for large multinationals. This change is welcomed by some business associations, which consider the current requirements too onerous for intermediate-sized companies. However, some NGOs and environmental groups have expressed concern about the risk of less transparency and reduced ability to monitor the impact of corporate activities on the environment and society.

One of the most controversial changes concerns the concept of materiality in the CSRD. Currently, the principle of dual materiality obliges companies to consider both the financial impact of environmental and social issues, and the impact of their activities on the environment and society. This approach is considered crucial for comprehensive and transparent reporting. However, some internal Commission drafts had proposed moving to a single financial materiality, aligning with the ISSB (International Sustainability Standards Board) standards, which focus exclusively on economic impacts for investors. The leaked draft, however, does not seem to include this change, a sign that the Commission may have decided to maintain the principle of double materiality, avoiding a clash with the European Parliament and civil society organisations.

One of the most critical aspects of the CSD concerns the requirement to collect data on suppliers and business partners along the entire value chain. This requirement has often been criticised for the administrative burden it imposes, particularly on SMEs that have to provide information to the large companies with which they collaborate. The leaked draft proposes to ease these obligations by stipulating that large companies will no longer have to request additional data from companies not subject to the CSRD. This change could reduce the administrative burden for many companies in the supply chain, making it easier to manage sustainability data. However, some experts fear that this reduction in obligations could lead to less transparency along the supply chain, limiting the ability to monitor the environmental and social impact of indirect business activities.

The CSRD directive envisages the adoption of sector-specific reporting standards (ESRS), with a first set of standards expected by June 2026. However, the development process of these standards seems to be proceeding slowly, and the leaked draft does not mention any precise deadlines for their publication. If confirmed, this delay could provide more time for companies to adapt to future reporting obligations, but it could also generate uncertainty as to what specific requirements will need to be met. The absence of defined deadlines might suggest that the Commission is considering a broader revision of the sectoral reporting system, with possible changes to both the timing and content initially envisaged.