Client Alert: Important Summary Status for EU Omnibus

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EU Omnibus Update: What Companies Need to Know About Pending Changes to CSRD and CSDDD

The following issues represent the current status of the EU Omnibus finalization:

  1. The EU Parliament struggles to reach a consensus on which companies are included or excluded from CSRD and CSDDD. Most likely compromise: cut-off for in-scope companies will be 1000 employees. Next vote: November 14, 2025.

  2. Climate Transition Plan is the hot debate for CSDDD.

  3. Conservative parliament members want Climate Transition Plans out of CSDDD. But it still stays in CSRD.

  4. Great agreement on Omnibus for simplification, but not deregulation.

  5. Assurance requirements in the crossfire.

  6. Compliance is no longer the primary driver, given the expectation that thousands of companies will be outside the scope of CSRD and CSDDD.

  7. Drivers will continue to be a company’s pressure points:

  • Customers

  • Investors

  • Leading to the need for Bilateral Disclosures - measurements not made public, just disclose to investors and customers when requested.

Special Notes on Double Materiality

The EU Omnibus proposal does not change the core principle of double materiality, which remains a foundational requirement of the CSRD. Companies must continue to report on both their impact on people and the environment (impact materiality) and how sustainability risks and opportunities affect their financial position (financial materiality).

However, the pending Omnibus legislation does introduce significant proposed changes aimed at simplifying the application and reducing the reporting burden associated with the double materiality assessment (DMA) in practice:

  1. Simplification of the Assessment: The European Financial Reporting Advisory Group (EFRAG) has been tasked with revising the European Sustainability Reporting Standards (ESRS) to make the DMA simpler and less burdensome. This includes moving towards a more "top-down," strategic approach rather than a granular scoring process.

  2. Reduced Data Points: The Omnibus aims to substantially reduce the overall number of mandatory data points required in the ESRS, which will directly affect the information gathered during the materiality assessment process.

  3. Clarified Guidance: The revised ESRS, which the Commission intends to adopt shortly after the Omnibus becomes law, will provide clearer instructions and more non-mandatory illustrative guidance on how to apply the materiality principle effectively.

  4. Value Chain Cap: For non-in-scope companies in an entity's value chain (e.g., SMEs), there will be a limit on the information that larger, reporting companies can request. The requested information must generally be limited to what is specified in new, voluntary standards for SMEs, preventing an excessive "trickle-down" burden.

  5. Focus on Material Information: The changes place more emphasis on the materiality of information as an overarching principle, encouraging companies to focus on genuinely material topics and avoid irrelevant disclosures.

  6. No Sector-Specific Standards: The mandate to develop sector-specific standards has been dropped, meaning companies will continue to use the general ESRS and apply the double materiality principle to identify their specific material topics, using other frameworks like GRI or ISSB as guidance where necessary.

In essence, while the principle of double materiality is preserved, the process of identifying and reporting on material topics is set to become more flexible, streamlined, and less administratively heavy under the proposed Omnibus.

For questions regarding EU Omnibus contact:

Vicky Keramida, Ph.D.
CEO & Chief Technical Officer
KERAMIDA Inc.

Email Vicky at keramida@keramida.com