Approved in 2022, the Corporate Sustainability Reporting Directive (CSRD) was subsequently simplified through the Omnibus package.
Communicating every year, according to a standardised and recognisable framework, both the environmental, social and governance issues that affect a company's business and the impacts the company itself generates on the environment and society. This is – in a nutshell – the objective of the CSRD, the European directive on sustainability reporting. Approved in 2022, the legislation was subsequently simplified by European institutions through the first Omnibus package, presented by the European Commission on 26 February 2025 and published in the Official Journal of the European Union exactly one year later.
Initially, the CSRD was set to apply to European companies meeting two of these three criteria: at least 250 employees, €40 million in net turnover, €20 million in total assets. The concern repeatedly voiced by companies, however, was that these requirements were too burdensome in terms of time and costs, especially for smaller organisations. For this reason, the Omnibus package raises the application threshold to 1,000 employees and €450 million in net turnover, with the exclusion of listed small and medium-sized enterprises and purely financial holding companies.
The pool of entities subject to mandatory reporting is therefore far narrower than originally envisaged: of the 50,000 companies that were to be involved, the Omnibus package amendments exclude 42,000. The total thus falls below that of the previous directive, the Non-Financial Reporting Directive (NFRD), which covered fewer than 12,000 companies. The possibility of subsequently extending the scope of application nevertheless remains open.
The CSRD does not merely establish who is required to publish sustainability reporting each year, but also addresses the methodology in detail. Even after the Omnibus package, the core principle of ensuring comparable, verifiable and decision-useful information for investors and stakeholders remains unchanged.
Companies in scope continue to be required to comply with the European Sustainability Reporting Standards (ESRS), developed by a technical body known as EFRAG (European Financial Reporting Advisory Group). The latter, however, has been mandated by the European Commission to simplify the standards to prevent them from being overly burdensome and repetitive. In the proposal presented in December 2025, the number of mandatory disclosure requirements falls by 61 per cent and voluntary ones are eliminated entirely. The provisional trilogue agreement also embraces the possibility of limiting the quantity and quality of information required from value chain entities.
The structure of the report therefore becomes more flexible, with greater room for manoeuvre for those drafting it, who are called upon to focus more on how the company concretely manages sustainability issues, to the benefit of clarity and conciseness of information. On a formal level, the ESRS become more comprehensible and accessible, also thanks to simplified language and shorter texts.
The CSRD defines legal obligations, but sustainability reporting is much more than that: above all, it is an additional tool for understanding one's own company and guiding it through a process of change. Companies that are transparent on environmental, social and governance (ESG) issues may access credit more easily or on better terms, appear more attractive to investors, prepare in advance for future regulatory requirements, and meet information requests from their own customers, employees and partners. All of this regardless of what a European regulation may mandate.
This is confirmed, for example, by a survey conducted by specialist firm osapiens among executives of over four hundred European and British companies with at least 1,000 employees each. Of these, approximately one in four has fallen outside the scope of the CSRD, yet in 90 per cent of cases the excluded companies continue to report anyway and, in 86 per cent of cases, do so in compliance with the standards set out by the directive.
EFRAG is currently also focusing on companies excluded from the CSRD, developing new voluntary standards (known as VSME, Voluntary Sustainability Reporting Standard for non-listed SMEs) which, while considerably more streamlined than the ESRS, still enable companies to meet the information requests of their key stakeholders.