The European Commission’s Omnibus proposal represents a major milestone in the evolution of the European Union's (EU) sustainability regulation. The initiative aims to simplify reporting, reduce administrative burden and boost European competitiveness while ensuring the long-term integrity of the EU’s sustainability framework.

On 16th December 2025, the European Parliament approved a provisional agreement aimed at streamlining and reducing the scope of corporate sustainability reporting and due diligence requirements. 

This decision finalises the ‘Omnibus I’ package, originally proposed by the European Commission in February 2025 to simplify sustainability and due diligence reporting under the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). Post final agreement from the European Council, a clear picture is now emerging on the requirements for corporates under CSRD and CSDDD. 

The key headlines for businesses are outlined below. 

Key Takeaways

  • Scope Changes - revised threshold for an EU company to be in scope is 1,000 employees and €450 million net turnover (non-EU undertaking’s EU turnover is also set at €450 million).
  • Listed SMEs - removed from scope, which eases reporting obligations for small, listed companies.
  • Reporting Deadlines Are Delayed (“Stop the Clock”) - providing companies additional time to prepare for compliance. The revised timeline introduces transition exemptions and deferrals for affected companies:  
    • Wave 1 Reporters: Companies that initiated reporting for FY 2024 are expected to maintain their reporting obligations into FY 2025, as most will remain within scope under the revised criteria. The companies that now fall out of scope due to updated thresholds may be exempt from reporting for FY 2025 and subsequent years. Member States will have 12 months to implement the changes relating to CSRD into their national laws. 
    • Wave 2 Reporters: Previously scheduled to commence reporting in 2026 for FY 2025, these companies will see their start date deferred to 2028 for FY 2027. These companies will need to prepare for reporting during 2026 - 2027 to align with revised CSRD requirements.
  • Limited versus Reasonable Assurance - CSRD assurance continues to be confined to limited assurance, and the Omnibus framework does not require a transition to reasonable assurance as of yet. 
  • European Sustainability Reporting Standards (ESRS)
    • EFRAG submitted revised simplified versions of the 12 ESRS that underpin the CSRD requirements to the Commission on 3rd December 2025, where a formal adoption via a delegated act is set to take place in 2026.
    • A reduction in mandatory data points brings a reduction of c. 61% with all voluntary data points being removed. EFRAG also launched a new ESRS Knowledge Hub to centralise all ESRS materials and standards.
  • VSME - The Voluntary SME reporting standards become more important, strengthening their role as a tool for SMEs and any company not in scope of mandatory CSRD reporting.
  • Value Chain Cap - Companies with less than 1,000 employees will only need to provide data within the VSME voluntary reporting standard.
  • CSDDD - The agreement also adjusted the scope of CSDDD. It removes certain obligations like climate transition plans (CTP) and extends first application timelines. While the requirement for a CTP has been removed in CSDDD, it still remains as a requirement in CSRD. It was considered a duplication of effort for businesses, so its removal is largely for simplification purposes only.
  • EU Taxonomy - Revised scope means that companies with less than €450 million turnover are relieved from reporting. Simplified reporting templates also remove a significant number of data points. However, companies falling outside of the new scope may still choose to report voluntarily.
  • ESG Reporting is not going away - While these simplifications roll back the scope and level of obligations, a mandatory or voluntary reporting requirement remains integral for many businesses and their licence to operate. Importantly, the regulatory landscape is expected to evolve, as there are provisions to revisit and refine proposals over time. Ultimately, having structured, transparent, and assured ESG data across operations and value chains is a key requirement for businesses for meeting multiple regulatory, customer or investor/lending/insurer requirements.

Where are we now?

The first Omnibus package was published back in February 2025, and the timeline below highlights the key milestones in the development of the proposal throughout the year.

omnibus-timeline-graph

What should Irish businesses focus on now?

  1. Assess whether the new thresholds change your requirements – Review scoping against new thresholds: 1,000 employees and €450 million EU turnover.
    • For Wave 1 reporters that remain in scope, continue to deliver CSRD reports as planned and consider how simplification measures may impact future reporting. For those who now fall out of scope, sustainability reporting will still be required, albeit much lighter. It is recommended that proportionate CSRD-aligned disclosures be made available. 
    • For Wave 2 reporters that remain in scope, the reporting delay should be leveraged to build your reporting foundations, such as processes and controls. 
  2. Supply Chain Obligations – If you fall within the supply chain of a large CSRD reporter, your organisation may be asked for structured ESG data even if your organisation is out of scope. Tools like VSME will be important to structure data in a credible and comparable way, as the data points align with mandatory CSRD requirements, just a smaller subset (see separate section below).
  3. Prepare for Assurance – Start building controls and evidence trails that will support limited assurance.
  4. Track ESRS finalisation – Delegated Acts will define technical disclosure requirements.

VSME: Why this matters more than ever?

Developed by EFRAG, the Voluntary SME Standard (“VSME”) offers SMEs a simplified, more proportional way to disclose sustainability information. Under the Omnibus agreement, VSME becomes even more significant as the EU shifts towards reduced CSRD thresholds. For many Irish SME’s that fall into the value chain of larger CSRD reporters, the VSME can serve as a practical and standard way to provide ESG information.

Companies can choose either a Basic or a Comprehensive module, proportionate to their business needs. The Basic module focuses on a smaller set of data points that offer a higher level of disclosures. It is helpful for companies with limited resources or those that respond to less burdensome value chain requests. The Comprehensive module builds on the Basic module and is more closely aligned with ESRS metrics. 

These modules give SME’s flexibility while ensuring disclosures remain consistent. Furthermore, EFRAG’s VSME Digital Template and XBRL Taxonomy offer a structured, digital approach to reporting sustainability information in a standardised and accessible format. It facilitates easier regulatory compliance and improves the usability of sustainability data for stakeholders. 

BASIC MODULE

  • Entry level for non-listed SMEs
  • Target for micro-undertakings
  • Simplified language
  • 11 Disclosures, including narrative disclosures, simplified, and ESG Topical Metrics
  • Simplifications: all required BUT whenever it is appropriate 'IF APPLICABLE'

Source: EFRAG VSME Standard: https://www.efrag.org/sites/default/files/sites/webpublishing/SiteAssets/VSME%20Standard.pdf

COMPREHENSIVE MODULE

  • To provide more comprehensive information on top of Basic module, requested by business partners
  • Sustainable Finance datapoints (Table 1 SFDR PAI, EBA Pillar 3, Benchmark Regulation) as proxies for ESG Management
  • Further language simplification achieved wherever it is appropriate 'IF APPLICABLE'
  • 9 disclosures
  • Applying the Basic module is a prerequisite for applying the Comprehensive module

What happens next?

  • The Commission aims to finalise Omnibus I amendments by end of 2025, with Council adoption expected in January 2026. After publication in the EU Official Journal, the law will take effect in 20 days, giving Member States 12 months to implement CSRD changes nationally.
  • ESRS – Delegated act to be published in 2026.
  • Continued interoperability with IFRS Sustainability Disclosure Standards and other mainstream reporting frameworks like the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP).

How BDO can help

  • Scope and Impact assessment– Determine whether your company falls within new thresholds and what your obligations are.
    1. Wave 1 Reporters: 
      • Conduct a comprehensive review of year 2 reporting, identifying gaps and integrating lessons learned from prior assurance activities.
      • Assess updates to Double Materiality Assessments (DMA) guidance and develop a tailored action plan for continuous compliance.
      • Ensure alignment with evolving regulatory requirements and enhance internal processes based on the latest best practices.
    2. Wave 2 Reporters:
      • Facilitate a dry run report to build internal capabilities across governance, people, processes, and technology.
      • Establish robust governance mechanisms to support sustainability reporting.
      • Conduct assurance readiness.
  • VSME & ESRS – Determine current reporting maturity to evaluate whether a basic or comprehensive reporting module delivers optimal value. Provide scalable support to meet evolving stakeholder expectations.
  • ESG Data Collection and Digitisation – Support on measuring and collecting ESG data to meet the CSRD and VSME data point requirements. Support in transferring manual ESG data collection to automated and digital applications.
  • Assurance Readiness – Set up data, controls, and processes to support limited assurance.
  • Taxonomy, IFRS & CSDDD alignments – Coordinate disclosures across frameworks to avoid duplication and ensure consistency.

Article written by Jennifer O'Connor, Sustainability Manager, BDO Ireland Sustainability Services.  

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