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Sustainability update

July 2025

  • Omnibus sustainability hub

    Omnibus sustainability hub

    Access Accountancy Europe’s full range of publications and other resources on the Omnibus sustainability proposal

  • CSRD scope reduction

    CSRD scope reduction

    Read Accountancy Europe’s views on CSRD scope and how different thresholds impact companies across Europe

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Highlights

  • Council of the EU reaches position on Omnibus
  • European Parliament latest study on reporting obligations
  • European Commission intends withdrawing Green Claims Directive
  • Commission extends deadline for EFRAG to deliver technical advice on ESRS
  • EFRAG presents its progress on ESRS simplification
  • IFRS presents new jurisdictional profiles

Feature story

European Parliament Legal Affairs Committee consideration of amendments to Omnibus proposal

Rapporteur MEP Jörgen Warborn (EPP, Sweden) presented his report on the Omnibus proposal amending corporate sustainability reporting and due diligence requirements to the European Parliament (EP) Legal Affairs Committee (JURI) on 24 June. He argued that the European Commission’s (EC) proposal does not sufficiently reduce burdens.

He proposes the following changes to further cut costs for businesses:

  • increase scope thresholds to 3,000 employees and €450 million turnover under both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD)
  • limiting information requests from value chain companies with less than 3,000 employees and €450 million in net turnover to the information specified in a voluntary sustainability reporting standards
  • limiting due diligence obligations to direct partners and removing the requirement for climate transition plans under the CSDDD
  • re-introduces a deadline – 1 October 2026 – to adopt a limited assurance standard
  • the CSDDD application would be delayed to July 2028, with guidelines expected by mid-2026.

European People’s Party (EPP) MEPs supported further simplification, with MEP Angelika Niebler (EPP, Germany) calling for the CSDDD’s cancellation.

Shadow rapporteurs shared their views, noting that:

  • MEP Lara Wolters (S&D, The Netherlands) warned that the report weakens core environmental and social safeguards
  • MEP Pascal Canfin (Renew, France) said he would introduce amendments to ease audit rules and reduce costs
  • MEP Kira Marie Peter-Hansen (The Greens, Denmark) noted that the ongoing European Sustainability Reporting Standards’ (ESRS) revision should be considered before proceeding with further simplification

Read more

European developments

Council reaches a position on Omnibus

The Council of the EU agreed on its position on the Omnibus proposal amending certain sustainability reporting and due diligence requirements on 23 June.

The Council’s position on the CSRD:

  • applies to undertakings with more than 1,000 employees and €450 million turnover; listed SMEs are excluded
  • provides Member States an option to exempt undertakings with 500–1,000 employees until end-2026
  • limits information requests to what will be specified in a voluntary reporting standard for value chain companies with fewer than 1,000 employees
  • includes a review clause to assess scope suitability, with a view to investment needs and competitiveness.

On the CSDDD:

  • scope: thresholds raised to 5,000 employees and €1.5 billion turnover
  • due diligence limited to tier 1, with a review clause on possibly extending it
  • civil liability left to national rules
  • transposition deadline postponed to 26 July 2028.

The Council can enter the negotiations with the EP once the latter adopts its negotiating mandate on the proposal.

Read more

 

Parliament’s study on reporting obligations

The EP commissioned a study at the request of the JURI Committee examining regulatory overlaps in the CSRD, the CSDDD, and the EU Taxonomy.

Amongst the study’s key observations:

  • raising CSRD thresholds is deemed ‘probably appropriate’. However, the chosen threshold lacks analysis and justification
  • the stop-the-clock provision is appropriate and justified
  • ESRS revisions and taxonomy delegated act are considered sound, but it is key to prepare impact assessments for future updates on these files
  • key to align EU rules with global standards, but need for clear justifications and impact assessments.

The study, however, criticises the EC’s approach to the Omnibus directive for lacking transparency, omitting impact assessment, and reversing prior positions without clear justification.

Read more

 

Commission intends withdrawing Green Claims Directive

The Council cancelled the trilogue meeting on the Green Claims Directive (GCD), scheduled for 23 June, following political signals suggesting the EC’s intention to withdraw the proposal.

The GCD was considered as a flagship initiative to combat greenwashing that is now at the last stages of the trilogue negotiations. It requires companies to verify their environmental claims to prevent greenwashing and protect consumers.

The EC officials promptly clarified that the initiative has not been formally withdrawn.

Prior to this, shadow rapporteurs on the file MEP Arba Kokalari (EPP, Sweden) and MEP Danuše Nerudová (EPP, Czech Republic) sent a letter to Commissioner Jessika Roswall asking the EC to reconsider and ultimately withdraw the GCD proposal. In the letter, MEPs clearly stated that they will not support any trilogue outcome, arguing that the GCD undermines EU commitments to better regulation and risks harming businesses without clear benefits. While supporting action against greenwashing, they believe the existing Empowering Consumers for the Green Transition (ECGT) Directive is sufficient if properly enforced.

Read more

 

Commission extends deadline for EFRAG to deliver technical advice on revised ESRS

In the letter, Commissioner Albuquerque asked EFRAG to ensure that the following points are integrated in the draft revised standards:

  • no new additional datapoints and voluntary datapoints should not be converted to mandatory
  • consistency and readability of the draft standards
  • consider advantages and disadvantages of voluntary disclosures and guidance
  • new or modified terms and concepts should only be considered if adding to simpler and clearer standards
  • ensure focus and relevance of reported information
  • interoperability with global standards

The EC extended the deadline to deliver the technical advice to 30 November 2025.

Consequently, EFRAG Sustainability Reporting Board decided to extend the duration of the upcoming public consultation on the revised ESRS initially planned to run for 30-35 days. The public consultation period is now expected from the end of July until the end of September 2025 (60 days).

Read more

 

EFRAG presents its progress on ESRS simplification

EFRAG issued a progress report to update the EC about the work performed on ESRS set 1. The simplification effort so far aims to reduce datapoints by 50% by activating the following levers:

  • simplification of the Double Materiality Assessment (DMA)
  • better readability and conciseness of the sustainability statements and better inclusion in corporate reporting as a whole
  • critical modification of the relationship between Minimum Disclosure Requirements (MDR) and topical specifications
  • improved understandability, clarity and accessibility of the standards
  • introduction of other suggested burden-reduction reliefs
  • enhanced interoperability

Read more

 

EFRAG’s new educational material

EFRAG published a new educational video demonstrating the use of the VSME Digital Template and the Template to XBRL Converter, in support of the digitalisation of sustainability reporting for SMEs.

Read more

 

ESMA’s report on sustainability risks and disclosures

ESMA published its report on the 2023–2024 Common Supervisory Action (CSA) with NCAs, reviewing how investment managers integrate sustainability risks and disclosures.

The compliance with EU sustainability rules is satisfactory; however, risk integration and Sustainable Finance Disclosure Regulation’s (SFDR) disclosures need to be improved at both the entity and product levels.

ESMA calls on continued supervisory engagement and plans further coordination among regulators to promote convergence and strengthen market practices.

Read more

 

SMSG welcomed ESMA’s simplification approach on RTS

The Securities and Markets Stakeholder Group (SMSG) welcomed ESMA’s consultation on the draft technical standards (RTS) under the ESG Ratings Regulation and supports the simplification approach. It called for further clarity, especially on SMEs, outsourcing, and ‘scientific methodology,’ and urges alignment with ongoing reviews, including the CSRD.

Read more

 

Investors call for safeguarding of EU sustainability rules

198 signatories, including 84 investors, 29 companies and other organisations, issued a joint statement calling on policymakers to preserve the integrity of EU sustainability rules in the context of the Omnibus proposal.

The Omnibus should not undermine the core principles of the CSRD, ESRS, or CSDDD. Simplification should be achieved by:

  • streamlining ESRS while keeping the double materiality principle
  • applying CSRD to firms with over 500 employees, ensuring continuity with the Non-Financial Reporting Directive (NFRD)
  • allowing a phase-in, starting with companies over 1,000 employees
  • keeping the value chain cap to support meaningful data exchange between companies and investors
  • protecting the CSDDD core, ensuring risk-based due diligence aligns with United Nations (UN) and the Organisation for Economic Co-operation and Development (OECD) principles
  • retaining climate transition plan requirements under CSDDD

Read more

International developments

IFRS presented new jurisdictional profiles

The IFRS Foundation published 17 jurisdictional profiles and their progress towards the International Sustainability Standards Board (ISSB) adoption. Among them:

  • 14 have set a target to fully adopt ISSB standards
  • 12 have published standards or requirements that are fully aligned with ISSB
  • 3 incorporate a significant portion of ISSB disclosures
  • 1 is considering permitting the use of ISSB standards

It is also noted that the EU is missing from these profiles and will be updated after the ESRS revision.

Read more

 

IFRS publishes guidance on transition plans

IFRS issued a guidance on disclosures on transition plans. It builds on disclosure-specific material developed by the Transition Plan Taskforce (TPT), for which the IFRS Foundation took responsibility in 2024. The guidance:

  • supports entities applying IFRS S2 climate-related disclosures
  • is designed to enable entities to provide high-quality information about their climate-related transition when applying IFRS S2, and
  • covers disclosures about any ‘transition plan’ an entity has, including both mitigation and adaptation efforts

Read more

 

GRI publishes new climate standards

The Global Reporting Initiative (GRI) launched two new standards: the GRI 102: Climate Change and the GRI 103: Energy. Both standards are based on scientific and authoritative global instruments on climate change and are fully aligned with the GHG Protocol.

These streamline reporting practice for companies while ensuring decision-useful and highly relevant information that meets the needs of a wide range of stakeholders.

Read more

National developments

FCA and UK government consult on UK SRS

The UK government and the Financial Conduct Authority (FCA) are seeking feedback on the UK Sustainability Reporting Standards (SRS).

These standards, based on the IFRS S1 and S2 disclosure requirements and aligned with ISSB principles, will form the foundation for credible, decision-useful sustainability-related financial reporting.

The UK government is investigating the costs and benefits of adopting these standards, informing future decisions on mandatory reporting.

The FCA intends to consult on how listed companies will adopt the UK SRS and plans to strengthen expectations on transition plan disclosures, referencing the Transition Plan Taskforce framework.

Read more

MEP questions & replies

Country benchmarking in the EU Deforestation Regulation

  • Question by MEP Sigrid Friis (Renew, Denmark)
  • Reply by Commissioner Roswall

 

Need for broader deregulation and simplification to reduce administrative burdens

  • Question by MEP Beatrice Timgren (ECR, Sweden), Charlie Weimers (ECR, Sweden), Dick Erixon (ECR, Dick Erixon)
  • Reply by Commissioner Dombrovskis

Other news

Other events

This curated content was brought to you by Vita Ramanauskaité, Accountancy Europe Senior Manager, Head of Sustainability, since 2015. You can send her tips by email, follow her on X and connect with her on LinkedIn.