The ongoing review of sustainability reporting by the European Commission, known as the Omnibus package, has led to speculation about how the legislation might evolve. The first step in the Omnibus package aims to simplify the CSRD, CSDDD, and the taxonomy. The Commission’s proposal is expected on February 26, but this timeline might be delayed. CBAM might also be included.
The main idea of the Omnibus is to simplify regulations by consolidating them into common legal acts. However, it is still unclear whether the Commission will propose new rules or present a roadmap for future reforms. Given the influential Draghi report (“The Future of European Competitiveness”) from last year, which led to the Commission’s competitiveness compass, it is likely that proposals for regulatory simplifications will eventually be made, probably for both SMEs and larger companies.
There are countries and party groups within the EU working to delay the implementation, change the thresholds so fewer companies are affected, and reduce reporting requirements (e.g., proposals to remove the double materiality assessment). At the same time, it is also worth noting that both the President of the European Commission, Ursula von der Leyen, and the EU’s Economic Commissioner, Valdis Dombrovskis, have stated that the Commission’s fundamental direction towards a green transition remains, as recently outlined in the Commission’s 2025 work program.
A question many companies are currently asking is how the review might affect CSRD preparations. At this stage, we can only state that there is significant uncertainty about what the Commission’s proposal will look like, as only unconfirmed leaks and speculations have emerged. If the proposal involves reviewing the legislation, for example, regarding content or which companies are affected, uncertainties will persist for some time, as it will only be a proposal from the Commission that will likely need approval from both the Parliament and the Member States’ representatives in the Council. Then, changes must be implemented in the Member States’ own laws, which can take time.
Below are our reflections on the current conditions for companies of different sizes:
Large Companies: Until any new legislation is in place, the current Swedish legislation applies, i.e., the requirement for large companies to publish a sustainability report according to ESRS for financial years starting from July 1, 2024, onwards. Companies need to consider whether they have time to wait for potential new rules and reflect on the risks this might entail. It is particularly important to note that large companies currently face not only legal requirements regarding sustainability but also stakeholder demands, which can be equally important. Therefore, for some companies, it may be unwise from a business strategy perspective to lower ambitions regarding sustainability work and reporting.
Small and Medium-Sized Enterprises (SMEs): The requirements for listed SMEs have not yet come into force, and there are no CSRD requirements for non-listed companies. From a legal perspective, there is no reason for SMEs to start preparing for CSRD now, as the standard is not yet published for listed companies, and the outcome of the Omnibus is still uncertain. However, many SMEs should review their sustainability work and possibly their sustainability reporting from a business strategy perspective, as investor and customer demands are generally increasing (partly because stakeholders are affected by CSRD). To remain competitive, it may be wise to actively continue sustainability efforts.
Finally, we believe that the double materiality assessment, regardless of legal requirements, is a value-creating tool that provides insights and direction for strategic work for small, medium, and large companies. Through a double materiality assessment, the company ensures that it focuses on the most material sustainability issues and thus on the risks and opportunities it faces to remain an attractive market player.
Regarding sustainability reports for 2024 (where some large companies are preparing for the implementation of CSRD), which are prepared by companies just above the threshold for what is currently defined as large companies, 2050 recommends continued alignment with ESRS. However, companies may do well to wait a bit with preparing specific data points where they do not have information today, especially if they believe it does not contribute to understanding the company’s overall sustainability work.
To summarize, 2050’s position is that companies in this time of uncertainty should evaluate the importance of sustainability work and reporting from a business strategy perspective. Large companies should particularly analyze the legal risks of pausing, as the legislation already affects this group. Finally, we believe that these uncertain conditions are unfortunate, but simplifications are welcome as long as they do not harm business benefits and the pace of transition.