EU Commission announces reforms to ESG reporting

The European Commission has officially adopted a new package of proposals aimed at simplifying and streamlining ESG reporting and regulatory requirements. Following the leak of the Omnibus package in January, today’s announcement confirms significant changes designed to enhance business competitiveness and drive investment.

Although the proposal has not yet been passed into EU legislation, it has been placed into the fast-track approval process so no major changes are expected.

Key updates include:

• Reduce administrative burdens: The reforms will reduce the administrative burden by at least 25% for those within scope and 35% for SMEs, ensuring a more efficient and accessible reporting process.
• Extended reporting deadline: Companies in Wave 2 now have until 2028, removing approximately 80% of businesses from immediate scope and allowing more time for preparation for those that are in scope.
• Reduced reporting complexity: A new financial materiality threshold for Taxonomy reporting and a 70% reduction in reporting templates will make compliance more manageable.
• Protecting SMEs: The Omnibus aims to prevent large-company reporting requirements from negatively impacting smaller businesses within their value chains.

The Commission has stated that it is still encouraging businesses now outside the CSRD scope to adopt voluntary reporting frameworks, such as the Voluntary Standard for SMEs (VSME) which aligns with CSRD principles and helps businesses prepare for future mandatory requirements.

These changes mark a major shift towards a more practical, business-friendly ESG reporting framework. At Crowe, we are committed to guiding our clients through these evolving regulations and ensuring a smooth ESG journey. Ensuring that you take the time and invest in getting ready for the CSRD is essential, and Crowe can support you in achieving this readiness. If you have any queries or concerns about how these changes affect your ESG journey, we are here to help.

More information can be found in the European Commission press release.