The first wave of reporting entities under the Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) came into force on 1 January 2024, and

• The first wave of reporting entities, which includes large publicly listed companies with more than 500 employees (Wave 1), are now preparing their first sustainability reports for the year ended 31 December 2024.

The first wave of mandatory CSRD reporting may not directly affect many Channel Islands firms.

• However, the reporting timeline extends beyond this initial phase, and

• The focus on value chain reporting means that many firms will be indirectly impacted.

Understanding their reporting obligations to partners will be crucial as the regulation evolves.

In November 2024, the European Commission (EC), led by its president, Ursula von der Leyen, announced an intention to introduce a proposal to amend three key pillars of the European Green Deal through an Omnibus package.

These include:

• CSRD (Corporate Sustainability Reporting Directive)

• CSDDD (Corporate Sustainability Due Diligence Directive)

• Taxonomy Regulation

Since this announcement, there has been much speculation over how significant the changes might be and what the impact will be for reporting entities within the scope of the CSRD.

Meetings with EU stakeholders are continuing, and a clear indication as to what changes might be made is uncertain.

In January 2025, the EC published its ‘Competitiveness Compass for the EU,’ which directly refers to the Omnibus package. 

The key points raised relating to the Omnibus package include the following:

1. Omnibus proposals will be released on 26 February 2025 – however, due to the significance of the changes being made and deliberations still taking place, the release of these proposals may be delayed until March.
2. Recommendations to significantly simplify the regulatory landscape in Europe are likely. The EC wants to reduce administrative burdens on businesses by at least 25%, specifically focusing on lowering reporting requirements for small and medium-sized entities (SMEs) by at least 35%.
3. Recommendations introducing a new definition of small-midcap entities have been proposed. Reporting entities that fall into this category will benefit significantly from the regulatory concessions these entities will be given.
4. Plans to focus more on aligning the needs of investors to ensure that their investments in smaller entities are not hampered or impaired during the transition phase to full implementation of the CSRD, CSDDD and the Taxonomy Regulation.
5. Recommendations to address the trickle-down effect to prevent smaller entities involved in the supply chains of larger entities from being subjected to excessive reporting requests, an outcome never intended when the legislation was being drafted.
6. While the competitive compass document is not legally binding, it indicates the direction of the highly anticipated Omnibus package that will soon be released.

So far, the proposed Omnibus package has been met with mixed reactions.

While some businesses and politicians support the simplifications, others are concerned that they may compromise sustainability progress.

GRANT THORNTON SAYS

1. The EC will aim to balance simplification while maintaining the robustness of these directives focused on sustainability.

2. At this stage, it is difficult to predict the impact of the Omnibus and any changes that may result, if any. 

3. Given the status of this initiative, Wave 2 reporting clients (i.e. entities that are required to report under the CSRD in 2026) should continue to prepare for reporting for their 31 December 2025 year ends.

4. Wave 2 reporting clients may also consider seeking legal counsel if they are unsure of what to do and their reporting obligations, as the current situation is very complex.

SOURCE

Read the full Sustainability Alert article –  https://www.grantthorntonci.com/en/News-Centre/sustainability/the-omnibus-package--proposed-changes-to-the-csrd/