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First package of ESG legislation simplifications

6 May 2025 | Knowledge, News, The Right Focus

In response to calls from Member States for a relaxation of ESG requirements, Omnibus I, the first package of simplifications, has been presented by the European Commission .

The overall objective is to reduce administrative burdens on companies in the European Union. Importantly, the simplifications include:

  • The Corporate Sustainability Reporting Directive (CSRD), which was implemented[1] at the end of last year
  • The Corporate Sustainability Due Diligence Directive (CSDDD)

The draft directive postponing sustainability reporting and due diligence was passed by the European Parliament on 3 April as part of the so-called ‘Stop-the-clock’ proposal. This was done under an urgent procedure, without public consultation. On 16 April 2025, the so-called ‘Stop-the-clock’ Directive (EU) 2025/794 of the European Parliament and of the Council was published.

According to the work list of the Council of Ministers, the government will adopt the regulations on the CSRD Directive, which were amended as part of the work on the Omnibus package, in the second quarter of 2025.

ESG regulation in the European Union will become simpler

The new proposals will give companies much more time to prepare their sustainability reporting.

What does this mean?

  • For the CSRD, postponement of the reporting requirements by two years (from 2025 and 2026 to 2027 and 2028 respectively)
  • For the CSDDD, postponement of the transposition deadline (by one year) and of the application deadline for the first wave of companies covered by the Directive by one year

There will also be other simplifications, such as:

  • Reducing the scope of companies subject to mandatory ESG reporting to large organisations with more than 1,000 employees, which the European Commission has identified as having the greatest environmental and social impact (estimated reduction of 80% at EU level)
  • Limiting the information reported in the value chain – those reporting directly will not be able to request from their suppliers and partners ESG information that goes beyond the information specified by the EC in the voluntary Sustainability Reporting Standard
  • Introduction of a materiality threshold for key performance indicators (KPIs) covered by taxonomy disclosures
  • Introduction of a financial materiality threshold for taxonomy reporting and reduction of the number of reporting templates by approximately 70%
  • Reducing the cost of certifying ESG reporting by providing that auditors will ultimately certify the reports at the limited assurance level rather than the reasonable assurance level

Responsible business by nature

Irrespective of the reporting requirement itself, ESG is a cornerstone of modern corporate governance. Transparency, social responsibility and impact on the environment and local communities are increasingly important and are the basis for credibility assessment. Not only by financial institutions, but also by partners, customers and the public.

Savings and innovation

The European Commission estimates that EU businesses could save around EUR 6.3 billion a year in administrative costs alone. The new EU rules are also expected to mobilise around EUR 50 billion in additional public and private investment. This will create the space for innovation without which it may be difficult to achieve the sustainable development goals.

The European Union is not backing away from the Green Deal, but is simply making its approach to reporting requirements, which have been a significant burden on businesses, more flexible. The measures taken at Union level show that Europe is not abandoning its ambitious climate goals, but is responding to growing economic difficulties, rising inflation and instability in global markets. The proposed solutions are designed to help businesses adapt to environmental regulations so that the transition can take place without losing economic momentum. The EU is seeking to strike a balance between the needs of business and maintaining its leading role in global climate policy.

Any questions? Contact us

Joanna Barbrich

[1] By amending the Act Amending the Accounting Act, the Act on Statutory Auditors, Audit Firms and Public Supervision and Certain Other Acts

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Contact us:

Joanna Barbrich

Joanna Barbrich

Associate / Chief Sustainability Officer

+48 728 432 408

j.barbrich@kochanski.pl