Sustainability update

• First Omnibus package on sustainability introduces key amendments to CSRD and CSDDD
• Clean Industrial Deal to change industrial decarbonisation strategy
• European Commission’s 2025 work programme
• EU Platform on Sustainable Finance proposes to simplify EU Taxonomy
• FRC’s analysis of sustainability assurance market

First Omnibus on sustainability introduces key amendments to CSRD and CSDDD

The European Commission (EC) issued its first Omnibus simplification package on sustainability on 26 February. The proposal introduced significant amendments to key pieces of sustainability legislation including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy Regulation, and the Carbon Border Adjustment Mechanism (CBAM).

CSRD linked changes:

• postpone the application of reporting requirements for ‘wave 2’ and ‘wave 3’ companies by two years
• reduce the CSRD scope to large undertakings and parent undertakings of a large group with 1000 employees on average and either exceeding € 25 million total on a balance sheet or € 50 million turnover
• propose a more flexible way for certain undertakings to report on EU Taxonomy
• introduce the value chain cap to apply directly to the reporting companies
• EC intends to adopt a delegated act with the revised first set of ESRS and a standard for voluntary use by companies
• EC will not adopt any sector-specific standards nor listed SMEs standards
• delete the obligation to adopt a reasonable assurance standard and the possibility of moving to a reasonable assurance requirement
• EC intends to issue targeted assurance guidelines by 2026

See Accountancy Europe factual analysis on CSRD & sustainability reporting standards

CSDDD linked changes:

• value chain due diligence is limited to direct suppliers
• large companies cannot request information from direct partners with less than 500 employees
• the frequency of monitoring is reduced from annually to once every five years
• companies are required to adopt plans with implementing actions with no obligation to put them into effect

See Accountancy Europe factual analysis on CSDDD

The EC will submit the Omnibus package proposal to the European Parliament (EP) and the Council of the European Union for their review, input and adoption.

Accountancy Europe issued a statement to share initial reactions to the Omnibus proposal.

European Commission consults on the EU Taxonomy

The EC published its first Omnibus package that focuses on sustainability rules, including the EU Taxonomy Regulation and its delegated acts.

The EC opened a feedback period on the EU Taxonomy amendments allowing stakeholders to submit their feedback till 26 March 2025.

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Clean Industrial Deal to change industrial decarbonisation strategy

The EC issued the Clean Industrial Deal (CID) aimed at supporting the competitiveness and decarbonisation of the European industrial sector. It will mobilise EUR 100 billion to support EU-made clean manufacture in the short-term. The CID outlines the following flagship actions:

• simplifying the Carbon Border Adjustment Mechanism (CBAM)
• financing decarbonisation through the Emission Trading System (ETS), and
• developing a low-carbon product label
• adopting the Circular Economic Act in 2026
• aligning member state tax policies with the objectives of the CID
• issuing recommendations on the Energy Taxation Directive (ETD) end 2025
• proposing an Industrial Decarbonisation Bank to fund a clean industrial future.

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European Commission’s 2025 work programme

The EC issued a communication with its 2025 work programme. It highlights the need to restore European competitiveness while staying the course with the EU’s long-term goal to become the first climate-neutral continent by 2050.

The EC work programme outlines several initiatives including three Omnibus packages: the first on sustainability (Q1), the second on investment simplification (Q1), and the third on small mid-caps and removal of paper requirements (Q2). Other significant proposals include the revision of the Sustainable Finance Disclosure Regulation (SFDR) in Q3 and the Clean Industrial Deal (Q1). Among the pending proposals, the EC includes the Green Claims Directive.

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European Commission’s new competitiveness task force

The EC set up a new task force focusing on the EU’s future competitiveness to operationalise the Competitiveness Compass. The task force will assist the EC in:

• closing the innovation gap
• combining industrial decarbonisation and competitiveness, and
• reducing excessive dependencies and increasing security

It will also ensure policy alignment and consistency while preparing flagship actions, including simplifying and improving the implementation of regulatory frameworks. The task force will also develop the Competitiveness Coordination Tool.

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JURI committee discusses competitiveness agenda with Commissioner Dombrovskis

The European Parliament’s (EP) Committee on Legal Affairs (JURI) held an exchange of views with Commissioner for Economy and Productivity, Implementation and Simplification, Valdis Dombrovskis. The Commissioner spoke ahead of the publication of the first Omnibus proposal on sustainability, highlighting it would cover:

• better alignment of requirements with the needs of investments
• proportionate timelines
• financial metrics that do not discourage investments in SMEs in transition
• more proportionate obligations relative to the scale of companies’ activities
• the trickle-down effects so that SMEs along the supply chains are not subject to disproportionate demands.

MEPs showed an overall support for the simplification agenda. However, some MEPs stressed that they would not support the EC giving in on the CSRD core elements such as the double materiality assessment as it would mean deregulation.

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EU Platform on Sustainable Finance proposes to simplify EU Taxonomy

The EU Platform on Sustainable Finance published a report responding to the EC’s mandate to simplify and enhance the EU Taxonomy. The report proposes key improvements:

• reducing corporate reporting burdens by over one-third
• simplifying the Green Asset Ratio (GAR)
• introducing a practical Do No Significant Harm (DNSH) compliance approach, and
• developing a simplified and voluntary approach for SMEs, banks, and investors to integrate taxonomy into their disclosures.

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ESMA on EuGB technical standards

The European Securities and Markets Authority (ESMA) published its final report on the technical standards on the European Green Bonds Regulation (EuGB). These technical standards focus on external reviewers, covering criteria to assess external reviewers’ application for registration with ESMA.

ESMA submitted the standards to the EC for adoption, subject to approval by the EP and Council.

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ISSB guidance on climate reporting

The IFRS Foundation published educational material for preparers reporting only climate information under the IFRS S2. This material is meant to:

• help preparers understand which requirements in IFRS S1 are applicable in these cases
• reflect the intended approach to disclosing information on only climate-related risks and opportunities that is permitted by ISSB Standards.

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FRC’s analysis of sustainability assurance market

The UK Financial Reporting Council (FRC) published a report on the sustainability assurance market evaluating the effectiveness of the UK market, including the availability of high-quality assurance. The study’s findings are:

• a presence of a wide variety of sustainability assurance providers with concerns over the consistency in the quality of the assurance provided
• a growing preference amongst the largest companies to use the big audit firms
• concerns about the immaturity of the UK sustainability assurance market
• the need for an established regulatory framework to ensure consistent, high-quality sustainability data for decision-making

The FRC also provides remedies to strengthen its market.

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