The Institute of Chartered Accountants in England and Wales (ICAEW) considers the European Commission’s (EC) newly adopted ‘Omnibus’ proposals a “significant” retreat from the original sustainability reporting ambitions.
With the fresh set of proposals, the EC aims to streamline the bloc’s regulations and enhance competitiveness, facilitating greater investment opportunities.
Approximately 80% of businesses will no longer fall under the scope of the Corporate Sustainability Reporting Directive (CSRD), with compliance obligations primarily directed at the largest corporations, as their operations have the most significant social and environmental impact.
This adjustment is intended to ease the reporting burden on smaller enterprises within supply chains.
ICAEW director of audit and corporate reporting Nigel Sleigh-Johnson said: “While in most respects the fundamentals remain intact, the proposed changes to the CSRD represent a significant scaling-back of the ambition for sustainability reporting in the EU.”
He stated that ICAEW will continue to analyse the wider implications as further details emerge.
The reporting timelines for companies currently subject to the CSRD, originally scheduled for 2026 or 2027, will be extended by two years, requiring compliance starting in 2028.
Reporting requirements under the EU Taxonomy will be reduced, limiting mandatory compliance to the largest corporations, while other companies will have the option to report voluntarily.
Johnson welcomed the EC’s decision to reconsider the scope of the mandatory reporting regime for both EU and non-EU companies, as well as the extended preparation period for most in-scope organisations.
He added that: “This is a challenging endeavour, and it is important to ensure that the demands on companies are proportionate and secure high-quality, trusted sustainability reporting.”
A key positive development highlighted by ICAEW is the commission’s plan to streamline European reporting standards by reducing data points and providing clearer guidance.
Additionally, the measures aim to ease compliance burdens on small and medium-sized enterprises (SMEs) within the supply chains of affected companies.
ICAEW also supports efforts to enhance interoperability between EU and international sustainability reporting standards, a longstanding priority for the institute.
However, Johnson expressed disappointment over the diminished prospects of transitioning from “limited” to “reasonable” assurance within sustainability reporting.
The director noted that such a transition would have strengthened confidence in reported sustainability data, improving reliability for stakeholders.
European Commission president Ursula von der Leyen said: “EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy. This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way.”
