The omnibus is so extensive and complex that I had to impose certain limitations. Today, I will only refer to changes in reporting, i.e., what may change in terms of CSRD and Taxonomy. The planned changes to CSDDD and CBAM will be discussed in the near future, as will the assumptions of the Clean Industrial Deal roadmap and changes to the InvestEU mechanism. Additionally, for the sake of simplicity, I use the term „company” throughout, but this should be understood to mean both a single company and a capital group.
CSRD
The changes to the CSRD will be introduced by two directives. One of them (which I will refer to as the „small Omnibus”) has a very limited scope and only concerns the postponement of phases II and III of the current directive to 2027 and 2028, respectively. The Commission anticipates that this simple postponement should not cause any controversy in the Council and Parliament and will therefore be quickly adopted, allowing member states to transpose the provisions into national law soon.
Other changes may cause prolonged legislative work, which is why they have been included in a separate draft directive (hereinafter referred to as the „big Omnibus”). It is difficult to predict today how long the negotiations on this legal act will take, as it concerns, among other things, changes to the scope of the directive and the collection of information from the value chain.
One of the changes being processed in the „big Omnibus” is that large companies with an average annual workforce of more than 1,000 employees will be required to report. These companies will apply ESRS standards. All other companies will be able to report voluntarily, using the VSME standard developed by EFRAG, which the Commission will first issue in the form of a recommendation and later as a delegated regulation. As for non-European groups (i.e., in practice, large subsidiaries in the EU belonging to non-European groups and large branches operating in the EU required to report on the entire group), the thresholds have been raised—the reporting obligation will apply if such a group in the EU has a turnover of at least €450 million (previously €150 million) or a branch has a turnover of at least €50 million (previously €40 million).
In addition, the Commission proposed in the „big Omnibus” that large companies (subject to reporting requirements) should be able to obtain from entities in their value chains with no more than 1,000 employees only information that is required to be reported under the VSME standard or that is customarily provided in the industry. The information provided by the Commission does not clarify how the interaction between the individual modules of the VSME standard (or whether the modular structure will be retained at all) and the information threshold will work.
„The ”Big Omnibus" also stipulates that no sector-specific standards will be issued in the future and that sustainability reporting will not be subject to reasonable assurance certification in the future . Instead, by 2026, the European Commission will issue non-binding guidelines on limited assurance – this level of assurance will apply to reporting. In the future, the Commission may also issue a standard for assurance at this level.
What does this mean for companies, i.e., who will have to report and when?
For some entities, everything is clear, while for others, it depends on the pace of legislative work. In my further analysis, I assume that the „small Omnibus” will be adopted in the coming months.
- Large listed companies with more than 1,000 employees (already reporting for 2024): nothing will change for them.
- Large listed companies with between 500 and 1,000 employees (already reporting for 2024): they will continue to report, but the obligation may disappear if the „big Omnibus” is adopted unchanged. If EU and Polish legislators do not meet the deadline (there is a high probability that legislative work on the „large Omnibus” will not be completed in 2025), these companies will also have to report for 2025.
- Large listed companies with fewer than 500 employees (not reporting for 2024, but current regulations require them to start reporting for 2025): they will definitely not report for 2025 or 2026. If lawmakers fail to pass the „big Omnibus” by the end of 2027, these companies would have to start reporting for 2027. This seems unlikely. Once the „big Omnibus” is passed, these companies will not be required to report.
- Small and medium-sized listed companies (which are currently required by law to start reporting for 2026): as above, i.e., it depends on whether legislators manage to adopt the „big Omnibus” by the end of 2028. If they do, the obligation will disappear; if they do not, the obligation will apply for the first time to the report for 2028.
- Large unlisted companies with more than 1,000 employees: will be required to report starting with the 2027 report.
- Large unlisted companies with fewer than 1,000 employees: they will definitely not report for 2025 or 2026. If lawmakers fail to pass the „big Omnibus” by the end of 2027, these companies would have to start reporting for 2027. This seems unlikely. Once the „big Omnibus” is passed, these companies will not be required to report.
- Small and medium-sized unlisted companies and all micro-enterprises (listed and unlisted): nothing will change for them; they did not and will not have to report.
ESRS standards
The Commission has announced a review of the current ESRS standards. The review will focus on removing less useful data points, distinguishing more clearly between mandatory and voluntary data points, strengthening the importance of numerical disclosures over narrative disclosures, clarifying issues that were unclear, simplifying the structure of the standards, and further aligning them with other EU legislation, GRI standards, and IFRS.
However, the review of standards is not part of the first Omnibus package; we have only received an announcement of these activities. The review will be carried out by EFRAG, in close cooperation with the Commission and other institutions that will be dealing with, for example, changes to the SFDR Regulation at that time. The Commission plans to issue the modified ESRS standards no later than six months after the „big Omnibus” comes into force. It should be concluded from this that the new version of the standards in the form of a delegated regulation will be issued no earlier than mid-2026.
Taxonomy
Here, the changes are twofold. The basic Omnibus package (the „large Omnibus” mentioned above) changes the scope of entities that are required to report. Disclosures regarding taxonomy will be mandatory for companies that have more than 1,000 employees and annual revenues exceeding €450 million. On the other hand, for companies that are required to report under the CSRD but have revenues of less than €450 million, the Commission proposes an „opt-in” option. Under this option, if a company claims to operate sustainably, it must disclose the percentage of turnover and CapEx (disclosure of the percentage of OpEx will be voluntary). In addition, the company will have to disclose the percentage of turnover and CapEx (OpEx voluntarily) if they relate to activities for which only some of the technical eligibility criteria are met. These changes are included in the „big Omnibus,” which may take some time to negotiate.
At the same time, the Commission announced public consultations (ongoing until March 26) draft amendments to the delegated regulation to Article 8 (the one that specifies how to calculate and disclose information on taxonomy) and certain elements of delegated regulations with technical eligibility criteria. First and foremost, materiality thresholds are being introduced: it will not be necessary to assess compliance with the criteria for those types of activities that together account for less than 10% of turnover, 10% of CapEx, or 25% of OpEx. Similar materiality thresholds have been proposed for a number of indicators disclosed by financial institutions. In addition, the templates in which companies are to report data on the Taxonomy will be significantly simplified.
Conclusions
The omnibus bill will bring many changes, and the final outcome of the regulatory work will not be known for some time. However, it will certainly affect many companies.
Since I am not in the habit of expressing my opinion without careful consideration, today I have tried to present only the facts concerning the Omnibus. In the next newsletter, next Monday, I will present my assessment of what the Commission has proposed and attempt to predict at least some of the consequences 😊
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