wutzkohphoto/Shutterstock Save for later Print Download Share In response to recent calls for reducing the bureaucratic burden on European companies, Ursula von der Leyen, president of the European Commission, recently announced the consolidation of the EU’s Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive and the EU Taxonomy into an “Omnibus Simplification Package.” The commission’s proposal for the omnibus was presented at the end of February, with a final vote anticipated toward the end of 2025.The main aim of the simplified omnibus package is to revise redundancies and overlapping reporting obligations, with an overarching objective of reducing the reporting burden by at least 25% and consolidating requirements into a streamlined framework while maintaining the regulations objectives.The CSRD that came into force in 2023 establishes standardized reporting for ESG factors for companies operating within the EU. The directive is rolled out in phases, and the first reports come out this year.What CSRD Means for Companies The European Commission’s announcement of the omnibus, with its simplified rules on sustainability, promises to deliver over €6 billion ($6.6 billion) in relief.Companies under the first phase, as currently defined, including EU-listed firms, banks and insurance businesses with over 500 employees, are still required to submit their first report this year. This is to be done within four months of their financial year end, for activities in financial year 2024, provided that their home country has transposed the current directive into national law. These companies may later be exempted from the directive if they have fewer than 1,000 employees, provided that the European Parliament and the European Council agree with the commission proposal.The second group of companies currently identified for compliance includes other large EU companies and groups that meet at least two of the following criteria: 250 or more employees, a net turnover exceeding €50 million or total assets over €25 million. This is the largest cohort and was initially expected to report in 2026. The third group includes EU-listed small- to medium-sized enterprises, which are expected to issue reports in 2027.These two groups of listed companies with fewer than 500 employees and large nonlisted companies (according to the European Commission definition) face the most uncertainty. The “Stop-the-Clock” directive, proposed by the commission and recently approved by the council and Parliament, sets a two-year delay in their reporting to allow time for the omnibus legislative process to be completed. If adopted as currently outlined, the omnibus would exclude all companies with fewer than 1,000 employees from the reporting scope.The omnibus also proposes changes to the scope for non-EU companies, raising the financial thresholds for compliance. Currently, non-EU companies are subject to reporting if they generate at least €150 million profit within the EU or operate an EU branch generating more than €40 million. The proposal raises these thresholds to €450 million in the EU or an EU branch generating more than €50 million. The reporting timeline remains unchanged, with reports due in 2028.The CSRD should have been transposed into national law by each of the 30 countries in the European Economic Area (EEA) within 18 months of coming into force by Jul. 6, 2024. However, in September 2023, the European Commission initiated infringement proceedings against 17 countries for failing to meet this deadline. As of now, 20 countries have complied, with most of the others having introduced draft legislation. The advent of omnibus may help to smooth the way for legal adoption by all EEA countries.Don’t Skimp on the PrepAs already noted, the first phase of companies is expected to publish their CSRD reports this year. Phase 2 companies that are expected to report in 2026 have seen their reporting deadline now pushed to 2028. However, implementing a solid CSRD strategy requires careful planning and resource allocation.Companies should focus on optimizing their processes to meet these standards efficiently, as preparing for CSRD compliance and sustainability reporting in general can provide significant strategic benefits, particularly in identifying performance gaps and growth opportunities.The first crucial step for companies embarking on the sustainability reporting journey is conducting a thorough, evidence-based double materiality assessment (DMA). The omnibus proposal reaffirmed the importance of this process, which relies on both internal and third-party data, alongside expert judgment from internal teams and stakeholders. A well-executed DMA enables organizations to identify and prioritize ESG issues most relevant to their operations, strategy and stakeholders, while also assessing their financial impact. Additionally, it helps streamline disclosure requirements by excluding immaterial topics. Climate reporting, however, requires special attention: Companies that determine climate is nonmaterial must provide a clear justification for their assessment.An analysis of the data points to be reported assessing the gaps between pre-existing reporting practices and updated European Sustainability Reporting Standards (ESRS) requirements is the natural follow-up. However, through the omnibus, the commission is proposing to revise the ESRS, with the aim of substantially reducing the number of data points, with a focus on quantitative data over narrative. The CSRD’s quantitative climate reporting requirements are relevant for most companies and less likely to be eliminated.Value chain analysis remains one of the most challenging and least mature areas for most companies. Here, an analysis of impact severity can be used to prioritize efforts, focusing on key issues. This leads to the third step: implementing corrective measures to gather the necessary data taking advantage of any extra time introduced in reporting. Even if the climate impact of the value chain is not covered in the revised version of the CSRD, engagement with suppliers is promoted by voluntary standards, such as the Carbon Disclosure Project platform or the Science Based Targets Initiative.How CSRD Compliance Can Benefit Business A well-executed sustainability reporting compliance program improves internal processes, boosting operational efficiency and streamlining data management, making it easier to adapt to new regulations. When developing their CSRD strategy, nearly all companies reported enhanced cross-departmental collaboration between sustainability, finance, risk, IT and business units. Companies must view sustainability reporting as an integral part of their business strategy, not a separate effort.The DMA and reporting standards encourage companies to proactively identify and manage ESG risks. A well-developed DMA helps uncover financial and operational efficiencies; this scrutiny can still help optimize costs, mitigate potential liabilities and avoid costly incidents or reputational damage that impact the bottom line.Despite the recent polarization of discussions around ESG topics, a from February of more than 1,600 C-suite executives at companies with over $250 million in revenue as well as 220 large institutional investors indicated that majority of companies not subject to sustainability reporting regulations still intend to align their reporting, at least partially. When asked if a strong sustainability reporting program will give businesses a competitive advantage in the next two years, 97% of the executives agreed.Looking ForwardIn a few months, the mood seems to have shifted from a full-on focus on corporate ESG to delays and relaxation of the sustainability-related rules amidst a backdrop of trade tariffs, government budget uncertainties and risks of economic downturn.But even though some investors may be cooling on the importance of understanding the environmental and social impacts of doing business at the organizational level, there are still significant strategic benefits, from enhancing operational efficiency to improving risk management, that come with complying with these new reporting requirements.The underlying fundamentals haven’t changed: global temperatures are still rising, climate disasters are increasing in frequency, biodiversity is still threatened and social inequalities are widening. These are all major threats to business continuity and profitability.Sustainability reporting, through CSRD compliance or via voluntary disclosure, is not just about meeting regulatory requirements; it is an opportunity for companies to futureproof their resilience, drive innovation and create lasting value for all stakeholders.Sophie Casenave is a policy affairs analyst at STX Group, a leading global environmental commodity trader and climate solutions provider. The views expressed in this article are those of the author.