In February 2025, the European Commission released the Omnibus Package which restructures the Corporate Sustainability Reporting framework as part of an overall simplification initiative. This is crucial for big businesses that were to abide by the burdensome obligations set in the Corporate Sustainablility Reporting Directive (CSR) that was to take effect in 2025 but are now exempted from it. Nevertheless, the Omnibus Package is more useful as it provides flexibility in governance and voluntary compliance through the VSME Standard.
Omnibus Package: Lessening the Burden
The CSRD will still retain reporting obligations, however, the Package proposes advancement of the upper limits of firms that have to report by moving the goal posts even further with the introduction of a new tier. Going forward, only companies with more than 1,000 employees, and further either a turnover exceeding \u20ac50,000,000 or total assets exceeding \u20ac25,000,000 will be bound to the reporting obligations. Consequently, it is expected that around 80% of companies that were anticipated to report under the framework will now be exempted from the mandatory requirements.
Moreover, the start date for reporting has been moved to 2027 for large companies which gives them more time to be inline with the new rules.
Voluntary ESG Reporting: VSME as an Option
With regard to companies that are no longer bound by the mandatory CSRD obligations, the EU’s Voluntary Standard for Sustainability Reporting for Non-listed SMEs (VSME) stands out significantly. It consists of a basic and an extended module, capturing most of the information that is routinely solicited by investors, financial institutions, and business associates.
This also applies to SMEs expecting to gain from greater ESG disclosure—for example, those doing business with large clients who are under the CSRD and therefore require ESG information from their supply chain partners.
Adopting a voluntary reporting approach brings a number of potential benefits. These include enhanced reputation, improved sustainable financing options, and better partnership and customer relations with organizations that prioritize environmental stewardship and social responsibility.
You can read more about VSME reporting here.
Benefits of Voluntary ESG Reporting
Enhanced brand recognition and reputation: active sustainability reporting implies responsibility and transparency which enhances brand image and appeal to sustainability-minded consumers and investors.
Access to financing: Capital availability improves for sustainable businesses due to more investors and financial institutions adopting ESG criteria. With the new financial regulations, demand for ESG data will rise among customers.
Enhanced risk management: Companies that address ESG risks are better prepared for future challenges, resulting in more stable and resilient operations.
Competitive advantage: Companies that report on sustainability gain an advantage and get ahead of market and regulatory expectations.
Looking Ahead – Perspectives and Future Challenges
While large companies gain more flexibility under the Omnibus Package, businesses must still face the reality that sustainability is no longer optional. Increasingly, businesses that do not embrace ESG factors are likely to struggle in a sharply differentiating sustainable market.
Even when reporting regions no longer have legal requirements, major customers expect sustainability efforts. Thus, embracing voluntary ESG reporting is a proactive way to move toward integrating sustainability into business strategy. This not only aids in long-term business growth but also fosters trust and counter-cyclical credibility in an ever-changing market.
If you’re unsure how to navigate the legal requirements and opportunities in sustainability reporting, it may be beneficial to engage an ESG consultant for expert guidance.
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