European sustainability regulation is once again undergoing a period of profound realignment. With the stated aim of reducing the administrative burden on companies, simplifying regulations, and strengthening the coherence of the European legal framework, the European Commission on February 26rd 2025 the first Bus package presented. This central reform project combines relief measures and adjustments for three core areas of EU sustainability law: the Corporate Sustainability Reporting Directive (CSRD), the EU taxonomy as well as those Corporate Sustainability Due Diligence Directive (CSDDD).
The trilogue negotiations on the Omnibus I package are now well advanced. The Commission, Parliament and Council have agreed on concrete simplifications regarding CSRD and CSDDD notified and also the EUDR (EU Deforestation Regulation)The agreement was revised shortly before its implementation. For the agreements to become legally binding, formal adoption by Parliament and the Commission is now required. The corresponding votes are scheduled for December 11 and 16. For companies, this outcome represents a clear direction for the future of their ESG reporting.
In parallel, the EU is working on reforming other regulatory cornerstones – including SFDR (Sustainable Finance Disclosure Regulation) and sector-specific supporting measures – thereby recalibrating the entire European sustainability framework. Initial proposals and formulations have already been published and clarify the direction of future adjustments.
For medium-sized businesses in particular, this dynamic of reform means that while the regulatory foundations remain in flux, the direction is clear – a reduction in bureaucracy. This creates an environment for companies in which formal reporting obligations decrease, but the expectations of the financial market, customers, and supply chains remain unchanged and high – and in some cases, the indirect impact of these factors even increases.
1. The current status of Omnibus I: Agreement reached in the trilogue negotiations on the CSRD and CSDDD
The Omnibus I package marks a crucial turning point in European sustainability regulation. Key adjustments to the regulations were agreed upon during the trilogue negotiations. CSRD and CSDDD The resolution aims to specify the simplifications, transitional arrangements, and relief measures for businesses and drastically reduce the number of users. This is based on the already adopted [regulation/guideline]. Stop-the-Clock Policy The reporting deadlines were postponed and the Quick-Fix Regulation This brings temporary simplification for current users. Additionally, suggestions for revising and simplifying the... EU taxonomy and the ESRS Submitted: The European Commission's delegated act on the EU taxonomy is in the final review phase and the revised ESRS of the EFRAG are being reviewed by the European Commission.
Higher reporting thresholds (CSRD)
The user group will be drastically reduced, and the reporting obligation will in future be limited to companies with
- more than 1.000 employees and over €450 million in revenue restricted. In combination with the Stop-the-Clock policy, this postpones the initial application to 2027 for large companies.
- Capital market-oriented SMEs are exempt from the reporting requirement.
This measure will relieve the burden on small and medium-sized enterprises and limit their ESG data requests to the reduced scope of voluntary standards.
Focusing and mitigating due diligence obligations (CSDDD)
Due diligence obligations Within the framework of the CSDDD, the thresholds for the scope of application are reduced and also raised:
- Reduced user group: Due diligence obligations only apply to companies from 000 employees and €1,5 billion in revenue be valid.
- Simplification: The requirement to draw up climate transition plans has been abolished.
- Focus on high-risk business partners: Companies should focus on those areas in their supply chain where actual and potential negative impacts are most likely to occur. Instead of limiting themselves to direct business partners, the focus shifts to narrowing down the impact within the supply chain.
- Postponement of the application periodThe Stop-the-Clock policy also applies here, postponing its application for companies until July 2029.
The risk-based approach, which focuses on vulnerable areas of the supply chain, could relieve unaffected companies within the supply chain of an indirect obligation. The EU emphasizes that it aims to prevent the collection of unnecessary information.
ESRS 2.0: Revision of the reporting framework
The mandate given to EFRAG, revised ESRS (European Sustainability Reporting Standards) 2.0 The revision process was completed on December 3rd with the handover to the Commission. This revision lays the foundation for a standard that is more clearly structured in terms of content, organization, and level of detail. Overall, the number of data points to be reported has increased by 61 percent reduced and all voluntary disclosures were removed with the aim of establishing a consistent, easily understandable, and practical reporting framework. The final ESRS 2.0 set is expected to be adopted by mid-2026 and is intended to be applied from the 2027 financial year onwards – possibly even earlier.
The ESRS set revised by EFRAG can be found here: Draft Simplified ESRS | EFRAG
Already implemented Among others, the following were included:
Stop-the-Clock Directive ((EU) 2025/794) (April 2025)
The application of the CSRD for large companies under accounting law and for listed SMEs has been extended by two years postponed. This postponement represents a key component of the relief strategy.
Delegated Act on the EU Taxonomy (July 2025)
- Introduction of a Financial materiality threshold:
There is no longer a reporting requirement for business activities that are financially immaterial and represent less than 10% of revenue, capital expenditure (CapEx), or operating expenses (OpEx). Furthermore, the OpEx KPI does not need to be reported if it is financially immaterial and less than 25% of revenue.
- Postponement of Key performance indicator (KPI) reporting for financial companies (including Green Asset Ratio),
- Focus on high-risk business partners: Companies should focus on those areas in their supply chain where actual and potential negative impacts are most likely to occur. Instead of limiting themselves to direct business partners, the focus shifts to narrowing down the impact within the supply chain.
This is the EU's response to the high operational costs and creates more clarity about priorities within taxonomy reporting.
Quick Fix Regulation ((EU) 2025/1416)
Since November 2025 in force and directly applicable without national implementation for financial years from 1 January 2025This regulation brings targeted relief to companies that are already required to report under CSRD and creates more proportionality in its application.
These steps illustrate that the European legislator is currently pursuing the primary goal of significantly reducing complexity and burdens for companies.
2. CSRD Implementation into the German Commercial Code (HGB): National Legislation in the Context of European Reforms
The numerous reform initiatives at EU level have a direct impact on the German legislative process. The government draft of September 3, 2025 still based on the original CSRD version, so near the bus modifications. This creates a double need for adaptation:
- timely integration the CSRD into the German Commercial Code (HGB) and
- downstream implementation the Omnibus results finalized in the trilogue.
Particular importance is attached to the future audit obligation to:
The draft proposes a mandatory external review (initially with limited certainty), but leaves open the possibility of further review. which testing providers will be permitted. This question will only be clarified in the final implementing legislation – an aspect of high relevance for companies that need to structurally prepare their ESG governance.
3. The new value chain gap: Why the VSME is becoming key for SMEs
Even though Omnibus-I significantly reduces the number of companies directly subject to reporting requirements, the market demand for reliable ESG information remains high. This is because the EU sustainability goals cannot be achieved with a smaller user base alone. Therefore, the so-called trickle-down effect ESG requirements are increasingly coming into focus, affecting companies not only through legal obligations, but also through other means. indirectly – via banks, customers and supply chains that continue to need and actively demand reliable sustainability data.
It is precisely at this point that a Value chain gap, that the new VSME (Voluntary Sustainability Reporting Standard for SMEs) It is intended to close. It offers small and medium-sized enterprises (SMEs) a uniform, pragmatic framework for providing the ESG information that is increasingly required along the value chain, in sales, and in the financing environment. At the same time, the VSME limits the unfiltered passing on of obligations ("mandatory pass-through") and clarifies the process. what data can realistically be requested and to what extent.
The regulatory perspective of financial market supervision is developing particularly dynamically in parallel. European Banking Authority (EBA) With its own initiative, it questions the threshold values discussed in the omnibus context. From January 2026, banks will be required to integrate ESG factors into lending, risk management and reporting in a mandatory and systematic way – regardless of whether a company is directly subject to the CSRD or not.This makes it clear for companies: Reliable ESG information is becoming a central factor. It is a component of credit risk scoring and therefore a key factor for financing conditions, credit availability and risk classification.
Against this background, it becomes clear that the formal reduction of reporting obligations through Omnibus I this does not in any way lead to lower requirements in business practiceRather, the market is moving in the opposite direction: Even companies that will no longer be directly subject to reporting requirements in the future are increasingly coming into focus through banks, major customers, and supply chains, and must prepare early for increasing [compliance/risks]. and, above all, standardized ESG data expectations Prepare. This information will be required in the future and will directly influence risk, pricing, and business decisions – with noticeable effects on financing, market position, and supply chain resilience.
4. Overview of further regulatory developments
In addition to the major reform projects surrounding CSRD, CSDDD, and the ESG data requirements for SMEs, other key elements of the European sustainable finance framework are also undergoing significant changes. Both the Sustainable Finance Disclosure Regulation (SFDR) and the EU Deforestation Regulation (EUDR) are currently being revised to clarify requirements, reduce burdens, and increase regulatory effectiveness.
SFDR reform: Clearer categories, less complexity
With the reform proposal of 20. November The EU Commission is laying the foundation for a completely revised SFDR. Key points include:
- Introduction of a new categorization system (“Transition”, “Sustainable”, “ESG Basics”),
- Focusing the user group on providers of sustainable financial products,
- Exclusion of investment advice and portfolio management from large parts of the scope of application,
- significant streamlining of disclosure requirements through
- Elimination of PAI obligations at company level
- Focusing product-related disclosures on a few, meaningful core indicators.
The aim is to make the SFDR more understandable, comparable and more practical.
Details can be found here: Press release from the European Commission of 20 November 2025
EUDR: Postponed deadlines and relief for smaller actors
The way food is EU Deforestation Regulation It will be revised to ensure a more practical implementation. An agreement was reached in the trilogue negotiations on December 4, 2025, which provides for a postponement of the application deadline and extensive simplifications:
- Application dates postponed to
- December 2026 (large companies)
- June 2027 (Micro and small businesses),
- Significant relief for downstream actors, by requiring due diligence obligations and the due diligence declaration only from companies that are launching a product on the EU market for the first time.
- Simplified one-off reports for very small companies
- Extensive relief for primary producers from countries without deforestation problems
- Books, newspapers and printed materials are completely removed from the scope of the EUDR.
The agreement also stipulates that the EU Commission will examine further potential relief measures until April 2026. This leaves room for further adjustments, meaning the specific obligations for companies remain open.
Detailed information can be found here: Press release from the European Commission of 4 December 2025
5. Conclusion and Outlook
In summary, the numerous proposed changes to European sustainability law primarily aim to reduce the burden and bureaucracy on companies. Nevertheless, the ongoing negotiations and discussions will take some time before final clarity is achieved. An important milestone is emerging with the agreement reached in the Omnibus Trilogue and the decision on the EUDR: for the first time, many companies will have a binding framework for their sustainability reporting and can clearly define their approach in light of rising stakeholder expectations. We provide you with practical, needs-based support to ensure you are well-prepared for the growing sustainability requirements.
Our performance promise to you: Holistic ESG excellence for your business success
At Moore TK, we pursue a holistic approach to ESG – going far beyond mere reporting requirements. Current developments surrounding CSRD, Omnibus I, VSME, the EU Taxonomy, EBA guidelines, SFDR reform, and EUDR demonstrate that sustainability remains a key success factor, shaping business models, financing, supply chains, and stakeholder expectations alike.
With more than 100 years of consulting experience and leading expertise in ESG, sustainability and financial reporting We set industry standards for a modern, robust, and pragmatic ESG implementation. Our interdisciplinary team combines Expertise, technological competence and regulatory depth to a consulting approach that integrates all relevant ESG dimensions.
We will accompany you scalable and practical – regardless of whether you are directly subject to reporting requirements or have to meet increasing ESG data requirements as part of a value chain.
Contact us
Book your personal initial consultation with us – free of charge and without obligation: Book your appointment
