In the ever-evolving landscape of sustainability regulations, the European Commission’s recent “Omnibus” package introduces significant amendments to the Corporate Sustainability Reporting Directive (CSRD), EU Taxonomy and Corporate Sustainability Due Diligence Directive (CSDDD).
These changes aim to streamline reporting requirements, reduce administrative burdens, and enhance the competitiveness of EU companies. Let’s explore these changes and their potential impact on your business.
Why the changes?
The European Commission’s motivation behind the omnibus legislation is clear: to foster a favorable business environment while ensuring companies are not overwhelmed by excessive regulatory demands. This recalibration is designed to support the EU’s ambitious Green Deal objectives while boosting economic growth and job creation.
What’s next?
The proposal has been adopted by the EU Commission but still requires approval from the European Parliament and the Council of the EU, so it’s likely we will see further changes.
Companies preparing for CSRD reporting, especially where it has been transposed into national law, should continue as planned. Investments made to align to CSRD, such as double materiality, data automation and upskilling, lay the foundation for improved sustainability and reporting practices. With sustainability regulation increasing across the globe, those companies who have already taken these steps are better equipped for the rise in demand for transparency on this topic.
Key changes to the CSRD
- Reduction in scope: The new amendments significantly reduce the number of companies required to report under the CSRD. Only large undertakings with more than 1,000 employees and either a turnover above EUR 50 million or a balance sheet total above EUR 25 million will be in scope. This change is expected to reduce the number of companies in scope by about 80%.
- Voluntary reporting for smaller companies: Companies with up to 1,000 employees will no longer be required to report under the CSRD. However, they can choose to report voluntarily using a simplified standard developed by EFRAG.
- Simplified reporting standards: The European Sustainability Reporting Standards (ESRS) will be revised to reduce the number of data points, clarify provisions, and improve consistency with other legislation. This simplification aims to make reporting more manageable and less burdensome.
- Postponement of reporting requirements: The application of reporting requirements for large companies that have not yet started implementing the CSRD and for listed SMEs will be postponed by two years. This gives companies more time to prepare and adapt to the new framework.
Impact on our customers
For our customers, these changes bring both opportunities and challenges. Here’s what you need to know:
- Reduced administrative burden: The reduction in scope means that many of our smaller customers will no longer be required to comply with the CSRD.
- Voluntary reporting: For those who choose to report voluntarily, the simplified standards will make the process more straightforward. This can enhance your company’s transparency and sustainability credentials without the heavy administrative load.
- Extended deadlines: The postponement of reporting requirements provides additional time to align your processes and systems with the new standards. This extension is particularly beneficial for companies that are still in the early stages of implementing sustainability reporting.
- Enhanced competitiveness: By reducing the regulatory burden, the amendments aim to boost the competitiveness of EU companies. This creates a more favorable business environment, encouraging growth and investment.
Tracking and managing your sustainability data is not just about meeting regulatory requirements; it also provides significant business benefits. Effective sustainability reporting can lead to improved operational efficiency, enhanced brand reputation, and increased investor confidence. By demonstrating your commitment to sustainability, you can attract new customers, retain existing ones, and differentiate your business in a competitive market.
At IFS, we understand the importance of managing sustainability data effectively. Accurate and efficient reporting is crucial for demonstrating your commitment to sustainability and meeting regulatory requirements. Our solutions are here to support you in this journey, ensuring that you can focus on what matters most, driving your business forward while contributing to a sustainable future.
