The European Commission has announced on 26 February 2025 significant regulatory changes aligning the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). More information can be found official website of the European Union. These adjustments drastically reduce the number of companies required to report while also postponing implementation for those still in scope. Here’s what this means for your business:

Key Changes Overview

While all three reports remain separate, both the number of companies in scope and the reporting requirements have been highly reduced.

Aligned CSRD and CSDDD Scope

• large companies with >1000 employees and with turnover > EUR 50M or balance sheet > EUR 25M will be in scope. This is a 80% reduction of the companies who have to report, leading to the fact that ESG Data will be available for very few companies.
• Listed SMEs and small institutions have no reporting obligations any more. They can report on a voluntary basis.
• The companies which remain in scope will have a 2-year postponement to prepare better for the reporting, meaning they will report in 2028 for the Financial year 2027.
• For companies which are no longer in scope of the CSRD, the Commission will adopt by delegated act a voluntary reporting standard based on the standard for SMEs (VSME) developed by European Financial Reporting Advisory Group (EFRAG). This standard will act as a shield, by limiting the information that companies or banks falling within the the scope of the CSRD can request from companies in their value chains which have fewer than 1,000 employees.

CSRD Content Simplification

The Commission intends to adopt a delegated act to revise the first set of ESRS, focusing on simplification and streamlining.

The number of mandatory European Sustainability Reporting Standards (ESRS) data points will be substantially reduced by:

• removing those deemed least important for general-purpose sustainability reporting,
• prioritizing quantitative data over narrative disclosures, and
• further distinguishing between mandatory and voluntary data points

Additionally, the revision emphasizes alignment with global standards and the elimination of sector-specific standards.

CSDDD Adjustments

The proposal postpones the first phase of the Directive’s entry into application by one year, meaning the first companies will report in 2028 for the financial year 2027, aligning with the second wave of CSRD.

Key adjustments include:

• Limiting the scope to direct business partners only
• Extending assessment intervals from 1 to 5 years

Taxonomy Refinements

• Reporting will apply only to “very large companies”, aligning the scope with CSRD and CSDDD (1,000-employee threshold).
• The Omnibus suggestion introduces CSRD amendments allowing a derogation from Article 8 and proposes draft amendments to Taxonomy Disclosures, Climate, and Environmental Delegated Acts.
• Voluntary Reporting: Large companies with 1,000+ employees and turnover up to €450 million can opt for voluntary Taxonomy reporting, reducing the number of companies obliged to report.
• Partial Taxonomy-Alignment: Companies making progress toward sustainability targets can voluntarily report partial alignment to showcase their efforts.
• Standardization & Reporting Simplification: The Commission will develop delegated acts to standardize content and presentation, reduce data points by 70%, and exempt non-material activities (≤10% of turnover, CapEx, or assets).
• Financial Institutions Adjustments: Banks can exclude companies outside the CSRD scope from the Green Asset Ratio (GAR) denominator exposures (i.e., <1,000 employees).
• Consultation on “Do No Significant Harm” Criteria: The Commission seeks feedback on simplifying pollution-related criteria for chemicals across all sectors.

The EU is updating sustainability rules with the aim to reduce unnecessary regulations and make it easier for businesses to grow while still meeting environmental goals. By simplifying reporting requirements and cutting administrative burdens, the European Commission tries to ensure a better balance between sustainability and competitiveness with the new approach.

Next Steps

• Submission for Approval: Proposals will be submitted to the European Parliament and the Council for consideration and adoption.
• Entry into Force: Changes to CSRD, CSDDD, and the Carbon Border Adjustment Mechanism (CBAM) will take effect once co-legislators reach an agreement and the proposals are published in the EU Official Journal.

The Commission urges co-legislators to prioritize the omnibus package.

Impact on financial institutions

For financial institutions, these developments signal a shift toward a more streamlined ESG regulatory landscape.

cleversoft’s Compliance Services for CSRD, Taxonomy, and CSDDD

cleversoft is closely monitoring these developments and once changes are adopted and delegated Acts published, we will adjust services accordingly. As a trusted RegTech provider, cleversoft offers reporting solution on all three regulations: CSRD, CSDDD and Taxonomy art 8.

For questions about our CSRD solution, please contact us through our contact form. Our experts are ready to provide detailed guidance.

With cleversoft’s compliance commitment, you receive a service with integrated regulatory updates as soon as they are officially released by regulators.