Sustainability Reporting & ESG
SUSTAINABILITY REPORTING HUB
To keep up to date with developments relating to the CSRD, CSDDD and the Taxonomy Regulation, please visit our Sustainability Reporting Hub.
OMNIBUS PACKAGE: PROPOSED AMENDMENTS TO CSRD AND CSDDD
On 26 February, the European Commission published an ‘Omnibus’ package, including proposals to simplify obligations under the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD):
postponing application of aspects of the CSRD and CSDDD - the "stop the clock" proposal; and
- amending obligations under the CSRD and CSDDD - the "amendments" proposal.
Both proposals take the form of draft directives which, if adopted, will require transposition into Irish law.
Stop the Clock
The “stop the clock” proposal postpones CSRD reporting by two years for companies due to report in 2026 (in respect of financial years commencing on or after 1 January 2025) and postpones transposition and first application of the CSDDD by one year. The Commission has asked the European Parliament and Council to “fast-track” this proposal which, as currently drafted, is due to be transposed by Member States by 31 December 2025.
Amendments to CSRD and CSDDD
The "amendments" proposal sets out more detailed revisions to the reporting, due diligence and climate transition plan obligations under the CSRD and CSDDD, including:
- CSRD Scope - confining application to large companies/groups with more than 1,000 employees (and either a turnover above EUR 50 million or a balance sheet total above EUR 25 million), aligning it more closely with the scope of the CSDDD.
- Non-EU Companies - the EU net turnover threshold for non-EU companies is increased to EUR 450 million.
- Optional Taxonomy Disclosures - for companies with net turnover of €450 million or less where they do not claim to have Taxonomy-aligned activities.
- Value Chain Cap – a limit on the information that reporting companies can request from entities within their value chains with not more than 1,000 employees.
- Climate Transition Plan - the requirement under the CSDDD to “put into effect” a climate transition plan is replaced with a requirement to include implementation actions, aligning with CSRD reporting requirements.
- Simplified Due Diligence – CSDDD due diligence obligations would be limited to direct business relationships, other than where there is plausible information suggesting adverse impacts in the value chain.
ESRS
A revision of the current set of ESRS has also been confirmed, including a significant reduction in the number of mandatory data points. The revised ESRS are to be adopted, at the latest, six months after the entry into force of the "amendments" directive. It is anticipated that exposure drafts of the revised ESRS may be available sooner.
The "amendments" proposal also removes the mandate for sector-specific ESRS.
The requirement to report from a double materiality perspective will be retained.
Next Steps and Timing
The proposals will now be submitted to the European Parliament and Council for consideration and adoption. Timing is key and while the European Commission has asked its co-legislators to expedite the legislative process for the “stop the clock" proposal, the timeframe is not yet clear. The "amendments" proposal, which is expected to follow the ordinary EU legislative process, is likely to take longer, particularly if further amendments are proposed by the Parliament or Council.
For more on the proposed amendments, see our recent Insights: Omnibus Package: Proposed Amendments to CSRD and CSDDD.
HORIZON SCANNING: KEY DATES
31 December 2025 – Proposed transposition of “stop the clock” postponement of CSRD and CSDDD.
1 January 2026 – CBAM fully applicable.
EU TAXONOMY: PROPOSALS TO SIMPLIFY REPORTING
Companies within scope of the CSRD are also subject to disclosure obligations under Article 8 of the EU Taxonomy Regulation. The proposed amendments to the CSRD (see above) include a derogation, such that where a company has a net turnover of EUR 450 million or less, Taxonomy reporting will be voluntary, unless the company claims to have Taxonomy-aligned activities. For CSRD reporting companies with a net turnover of more than EUR 450 million, Taxonomy disclosures will continue to apply.
The European Commission is also proposing amendments to simplify and improve the Taxonomy reporting regime. Alongside the Omnibus Package, the European Commission published a call for evidence on a draft Delegated Act setting out proposed amendments to the Taxonomy Disclosures Delegated Act, Taxonomy Climate Delegated Act and Taxonomy Environmental Delegated Act.
Proposed amendments to the Taxonomy Disclosures Delegated Act include the introduction of a de minimis threshold and simplified reporting templates resulting in a reduction of reported data points.
The Commission is also seeking feedback on two alternative options for simplifying the most complex ‘do no significant harm’ criteria for pollution prevention and control related to the use and presence of chemicals that apply horizontally to all economic sectors under the EU Taxonomy.
The consultation remains open for feedback until 26 March 2025. The European Commission intends to adopt the Delegated Act in Q2 2025, and it will apply from 1 January 2026.
PROPOSED AMENDMENTS TO CBAM
The EU Carbon Border Adjustment Mechanism (CBAM) Regulation applies to certain goods being imported into the EU. Products currently within scope of the CBAM are listed in Annex I of the CBAM Regulation and fall into categories of cement, iron and steel, aluminium, fertiliser, and electricity and hydrogen.
The CBAM is designed to apply the same carbon costs to those goods as would have been incurred had they been produced in the EU. Transitional reporting obligations have applied since 1 October 2023 and run until 31 December 2025 with the CBAM applying in full from 1 January 2026. For more information on CBAM see our Insights: Carbon Border Adjustment Mechanism: Provisions applying from Q4 of 2024.
As part of the Omnibus package, the European Commission published a proposal to simplify the CBAM.
A key proposed amendment is the introduction of a de minims threshold, which would exempt importers of smaller quantities of CBAM goods. It is proposed that the exemption would apply where goods do not exceed 50 tonnes (cumulatively per calendar year). The de minimis threshold will not apply to electricity and hydrogen.
Other proposed changes aim to simplify obligations in relation to authorisation of declarants, data collection from producers outside the EU, calculation of embedded emissions, emissions verification rules, and calculation of declarants’ financial liability. The date from which CBAM authorised declarants are required to obtain CBAM certificates would be postponed by one year to February 2027 (in respect of liabilities accrued from the beginning of 2026).
For more on the proposed amendments see our recent Insights: Omnibus Package: Revision of the Carbon Border Adjustment Mechanism.