Navigating the new EU Omnibus Simplification Package

According to McCready the Corporate Sustainability Reporting Directive (CSRD) may change significantly. ‘One of the most notable changes is the reporting deadline delay by two years for large companies in the second reporting wave. This extension grants companies more time to adapt, but the regulatory change also comes with a shift in focus,’ she explains. ‘Further’, she adds, ‘the scope for all EU companies proposes to include only large companies – either more than €50M in net turnover or €25M total balance sheet – that also have over 1.000 employees. This revision aims to reduce complexity for smaller enterprises.’

McCready: ‘This first Omnibus package allows organisations to take a more diligent approach towards sustainability and prioritise strategy over mere compliance. It grants additional time and anticipates a revision to the European Sustainability Reporting Standards (ESRS) that could empower companies to pinpoint their sustainability goals and challenges before external disclosures are required’.

Simplifications to ESRS 

The package also proposes some simplifications in the ESRS. ‘There's a significant reduction in the number of datapoints required for disclosure,’ she emphasizes. ‘Moreover, the previous requirement for transitioning from limited assurance to reasonable assurance in the future has been lifted, allowing businesses to maintain limited assurance indefinitely. These potential changes are crucial, as they would reduce the burden of compliance while still fostering transparency.’ According to McCready more clarity on the nature and extent of these changes will be provided once the delegated act is disclosed. The European Commission currently has up to six months after the date of publication of Omnibus to adopt the modified ESRS.

McCready encourages clients to make the most of this extra time to strengthen their sustainability strategy and reporting readiness. The PwC-expert urges organisations to remember that while this package remains at the proposal stage and may undergo further changes throughout the legislative process, it provides a unique opportunity to redefine their approach to sustainability. 

The second major highlight concerns the EU Taxonomy. According to McCready, the Omnibus package introduces a new level of flexibility for companies with less than €450 million in revenue. In principle, companies below this threshold are exempted from mandatory reporting. 

‘However, if you claim aligned activities, and opt-in for Taxonomy reporting, disclosing on revenue and capital expenditures is mandatory', she notes. ‘While reporting on operational expenditures is optional.’

The Corporate Sustainability Due Diligence Directive (CSDDD) has also undergone alterations, as McCready points out. ‘Companies in the first and second wave of the due diligence directive will have to comply with both CSDDD and CSRD at the same time, giving the opportunity to prioritise implementing meaningful human rights and environmental due diligence now and present more robust due diligence disclosures in their reports', she says.

Additionally, the Omnibus package has refined the extent of in-depth assessments under the CSDDD. ‘Now, with the proposals in the new package, evaluations beyond direct business partners may only be required when there's plausible information of actual or potential adverse impacts,’ she highlights. By limiting the reach of due diligence practices, the changes grant companies the flexibility to focus on significant risks without the burden of extensive processes.

Throughout the conversation, McCready underscores the opportunities the Omnibus package presents for businesses eager to move beyond compliance. ‘Though the core of European sustainability regulations remains intact, the additional time provides a window of opportunity for companies to concentrate on sustainable growth,’ she notes. ‘It's about going beyond ticking boxes to actually making a meaningful impact.’ 

At PwC, McCready and the sustainability team are already guiding clients through these evolving regulatory waters, equipping them with strategies to not only comply but thrive. ‘Ultimately, it's about fostering progress. We're here to ensure smooth transitions and support sustainable development throughout the business community.’