Proposed Changes to the CSRD (Pending Legislative Approval)
In February 2025, the European Commission published a legislative proposal, i.e. the Simplification Omnibus Package, which seeks to ease the regulatory burden of the CSRD for companies, particularly smaller entities and non-EU parents. While these proposals are not yet adopted, they may significantly impact CSRD timelines and scope.
Key proposed changes include:
Reporting Thresholds
The definition of a “large company” may be revised to include only companies with more than 1,000 employees, potentially removing the previous criteria of 250 or more employees.
Extended Timelines for Most Companies
Companies, excluding those who currently comply with the NFRD, who are expected to begin reporting for financial year 2025 may see their obligations postponed to financial year 2027, with their first sustainability reports due in 2028.
Non-EU Companies
The threshold for non-EU parent companies may increase from €150 million to €450 million in annual EU turnover. Reporting requirements for these entities may also shift to financial year 2029.
Exemptions for Listed SMEs
The requirement for listed small and medium-sized enterprises (SMEs) to report under CSRD may be removed entirely. These companies may instead be encouraged to report voluntarily using the Voluntary Small and Medium Enterprise European Sustainability Reporting Standard (VSME ESRS) that was released in December 2024.
The deadline for EFRAG to deliver its advice to the Commission on this proposal is 31 October 2025. In the meantime, the existing ESRS continue to apply.
The EU Commission also voted to postpone CSRD compliance by two years for all companies, except for those in the first wave of CSRD. Below is a breakdown of the new proposed reporting timelines:
Large listed companies and public-interest entities that were already reporting under the NFRD (i.e., large listed companies and public-interest entities with over 500 employees) still need to report according to CSRD as planned for FY2024 (in 2025), following the existing CSRD requirements
Large companies with more than 250 employees (proposed to increase to 1000 employees), including large non-listed entities that were not previously subject to the NFRD, previously needed to report in 2026 (FY 2025) but will now have a two-year delay, and are required to report in 2028 (FY 2027)
Listed SMEs that previously needed to report in 2027 (FY 2026) will now report in 2029 (FY 2028)
Non-EU companies with a net turnover in the EU of €150+ million (proposed to increase to €450+ million) in two consecutive years that own any either an EU-based branch with securities listed on an EU-regulated market exchange; or an EU office with €50 million+ net turnover; or a large EU-based undertaking must report in 2029 (FY 2028)
What you should focus on in the meantime (ahead of 31 Oct 2025)
Materiality Assessment
- Double materiality remains central to ESRS
- Prepare to disclose methodology and stakeholder engagement used to determine materiality (as required under ESRS 2).
Focus on Core Standards
- General disclosures (ESRS 2) and climate (ESRS E1) remain urgent.
- Prepare credible data for:
- GHG emissions (Scope 1, 2, and material Scope 3)
- Transition plans and targets
- Adaptation measures and risk assessments
Strengthen ESG Data and Controls
- Leverage systems like Ethica to ensure traceable, consistent ESG data.
- Prepare for limited assurance with robust internal controls.
Build Internal Awareness and Capability
- Provide targeted learning on ESRS
- Mobilise cross-functional teams to ensure readiness across reporting, risk, finance, and sustainability.
Stay Engaged
- Double materiality remains central to ESRS
- Prepare to disclose methodology and stakeholder engagement used to determine materiality (as required under ESRS 2).
For more information or support with the ESRS, contact us at info@envisionas.com today.
Ethica simplifies and structures your ESRS reporting journey — from materiality to climate data and assurance readiness.
