‘Stop the Clock’ Approved
In late February 2025 the European Commission announced the Omnibus Proposals, the first set of legisaltive proposals to help realise the Competitiveness Compass. The Questions and answers on simplification omnibus I and II (Q&A) summarizes the changes.
The package includes, amongst other things, a proposal for a Directive amending the CSRD and the CSDDD (Omnibus II) and a proposal which postpones the application of all reporting requirements in the CSRD for companies that are due to report in 2026 and 2027 (so-called wave 2 and 3 companies) and which postpones the transposition deadline and the first wave of application of the CSDDD by one year to 2028 (Omnibus I).
Omnibus I, dubbed ‘stop-the-clock’ proposal, entered into force on 17 April 2025 following its publication in the Official Journal of the EU after approval by the European Parliament and the European Council in early April. Member states now have until 31 Dec 2025 to transpose this into national law. In the meantime some member states continue to progress transposition of the CSRD: check out the latest version of Accountancy Europe’s tracker here.
The table below shows extracts from the Q&A pertaining to the proposed substanive changes to the CSRD. This DG FISMA newsletter provides a useful summary of the proposals.

Analysis and Reactions
This recent ACCA article analyses the proposals in so far as they impact sustainability reporting. There has been a numerous and widely diverging reactions to the announcement. As Reuters reported a coalition of NGOs that has lodged a formal complaint with the European Ombudsman over the Commission’s proposal centered around three key claims: (1) failure to properly gather evidence and assess impacts, (2) avoidance of broad consultations and favoring closed-door meetings dominated by industry voices, and (3) failure to assess whether the omnibus aligns with the EU's climate neutrality target. The coalition believes that strong sustainability laws like the CSDDD and CSRD are key to the EU’s competitive advantage in a global market.
Meantime, SMEunited and EFAA for SMEs have welcomed the effort made in the Omnibus proposal to reduce the burden for SMEs, in particular the value chain cap. According to one recent sudy, the Sustainability Transformation Monitor 2025, while most companies see the benefits of sustainability reporting either as equal to or exceeding the costs, a significant majority of SMEs believe costs exceed the benefits.

Timing and Approval
As this LinkedIn post explains, shortly after the adoption of Omnibus I (‘stop-the-clock’), the European Parliament’s Legal Affairs Committee (JURI) appointed rapporteurs and commenced negotiating Omnibus II. Final agreement will likely take until the end of 2025. This will then be followed by national transposition and implementation. JURI is deeply divided over which direction to take. Meantime, the Council of the European Union’s working group overseeing simplification met to examine a draft document that outlines member state initial asks on CSRD and CSDDD. They agree with the proposed scope reduction of CSRD.

Sustainability Assurance

The Omnibus proposal maintains the limited assurance requirement, proposes no changes to assurance providers, and maintains the EC’s delegated power to adopt a limited assurance standard, However, the proposal removes the 2026 deadline for adopting a standard and suggests deleting the possibility of moving from a requirement for limited assurance to a requirement for reasonable assurance. The EC intends to issue targeted assurance guidelines by 2026. Moreover, to protect SMEs it proposes requiring assurance providers to respect the obligation that companies should not request information from value chain companies with fewer than 1,000 employees beyond what is included in the VSME. This Corporate Disclosures article examines the impact of these proposals.

 

We have mixed views on the Omnibus proposal. The package fails to recognize and leverage the competitive advantage to be gained from the EU leading the global sustainable transition. We welcome the relief they offer SMEs and the simplification of the sector agnostic ESRS. For companies with up to 1,000 employees we suggest they be required to report on the basis of a simplified standard whose core is based on the voluntary standard for SMEs developed by EFRAG (EFRAG VSME).

 

5. What are the main changes that the omnibus package is bringing to the CSRD?
The omnibus package will bring several changes to the CSRD, making it more proportionate and easier to implement by companies:

• Reduction of the scope of reporting companies: The reporting requirements would only apply to large undertakings with more than 1000 employees (i.e. undertakings that have more than 1000 employees and either a turnover above EUR 50 million or a balance sheet total above EUR 25 million) This means that the number of companies in scope will be reduced by about 80%. The new scope will be more closely aligned with the key scope thresholds of the CSDDD.    
• ‘Value chain cap': For companies which will not be in the scope of the CSRD any more (up to 1,000 employees ), the Commission will adopt by delegated act a voluntary reporting standard , based on the standard for SMEs (VSME) developed by EFRAG. That standard will act as a shield, by limiting the information that companies or banks falling into the scope of the CSRD can request from companies  in their value chains with fewer than 1,000 employees..
• Commission's commitment to revise the European Sustainability Reporting standards (“ESRS”): The Commission will revise the delegated act establishing the ESRS, with the aim of substantially reducing the number of data points, clarifying provisions deemed unclear, improving consistency with other pieces of legislation and reducing the number of data points.  
• Deletion of sector-specific standards requirement: The proposal will delete the empowerment for the Commission to adopt sector-specific standards.
• Removing the reasonable assurance standard: The proposal is removing the possibility for the Commission to propose moving from a limited assurance requirement to a reasonable assurance requirement.
• Postponement of reporting requirements: Today's package proposes postponing by two years the entry into application of the reporting requirements for large companies that have not yet started implementing the CSRD and for listed SMEs (Wave 2 and 3) in order to give time to the  co-legislators to agree to the Commission's proposed substantive changes.          

6. What is the scope of the new CSRD?
Currently, the CSRD applies to all large companies (defined as companies above two out of the three following thresholds: €50 million net turnover, €25 million balance sheet total, 250 employees), as well as SMEs whose securities are listed on an EU regulated market. However, many businesses and industry associations have suggested that the Commission should revise the scope by excluding the smaller companies. Mario Draghi's report on competitiveness also highlighted that the rules would impose a disproportionately high burden on SMEs and small mid-caps than on larger companies.   
Today's proposal will reduce the current scope of the CSRD to large companies with more than 1000 employees (i.e. companies that have more than 1000 employees and either a turnover above EUR 50 million or a balance sheet above EUR 25 million). Those companies will be required to report against the European Sustainability Reporting Standards (ESRS), while these standards will also be revised and simplified.
Companies outside the scope of CSRD (companies with up to 1,000 employees) may choose to report voluntarily on the basis of a simplified voluntary standard to be adopted by the Commission, based on the voluntary standards for SMEs (VSME) developed by EFRAG.
The Commission estimates that the proposal will reduce the number of companies in scope by 80%. 
Source: Questions and answers on simplification omnibus I and II, European Commission, 25 February 2025

Omnibus Implications

On 25 April 2025 EFRAG officially submitted its work plan to the European Commission outlining the steps it will take to fulfil the specific mandate received on 27 March 2025 to provide technical advice on the revision and simplification of the ESRS by 31 October 2025. The work plan had just been approved by the EFRAG Sustainability Reporting Board (SRB) at the second attempt: in late February the SRB welcomed the Ominibus proposals in relation to sustainability reporting.
EFRAG has already commenced work. On 8 April EFRAG invited public input via an online questionnaire on potential revisions with a deadline of 6 May 2025 from all relevant stakeholders and the first wave of preparers who implemented the standards in their 2024 sustainability reports. This public call for input complements a series of interviews and workshops that EFRAG is organising with preparers, auditors and users. In their response Accountancy Europe have proposed the Commission’s list of targeted reviews to ESRS be split into two groups based on the amendment complexity, with each group following a different due process, as explained here.

Sustainability Reporting Standards for SMEs

Late last year EFRAG released the proposed sustainability reporting standard for voluntary use by non-listed SMEs (ESRS VSME) and submitted it to the Commission together with a cost benefit analysis (CBA) and basis for conclusions. EFRAG has initiated a range of activities to help raise awareness of and implement the standard. It has issued educational videos and facilitated many translations. To help broaden and deepen the ecosystem supporting the VSME, EFRAG has established the SME Forum and expanded the VSME Community and has consulted them on proposed guidance on the standard.

 

EFRAG Update

The March edition of EFRAG’s Monthly Update Podcast for Sustainability Reporting is available on YouTube or Spotify  The pdf version of the EFRAG Update for March, spanning financial and sustainability reporting, is here.

 

EFRAG VSME Webinar

On 7 April 2025 EFRAG hosted a webinar, ‘VSME In Action: Empowering SMEs for a Sustainable Future’ that attracted over a 1,500 participants. The full recording is here. A summary report will be published shortly. During the event Sven Genther, Head of Unit, Corporate reporting, audit and credit rating agencies (FISMA.C.1) explained that the ‘EFRAG VSME’ will be adopted, with minor changes, by the Commission as a recommended guidance by June 2025. Then, on conclusion of the legislative negotiations, the ‘Omnibus VSME’ that is proposed for voluntary use by companies employing less than 1,000 employees will be developed and, once agreed, follow the usual due process for EU delegated acts. Many delegates expressed concern that the ‘EFRAG VSME’ may not be suitable for companies with more than 250 employees. Some delegates proposed adding modules to address this, though others feared that making the VSME more suitable for larger companies could impair its utility as a value chain cap for SMEs.

 

We welcome the simplification of the sector agnostic ESRS, in particular simplification that will limit the impact on non-lsited SMEs in the value chain. As the VSME may serve as the basis for a standard for voluntary use by companies with 250-1,000 employees EFRAG ought to start considering what this should look like. Additional modules may need to be added. However, it is vital that the value chain cap be limited to the EFRAG VSME.

IFAC
The International Federation of Accountants (IFAC), the International Ethics Standards Board for Accountants (IESBA) and the International Auditing and Assurance Standards Board (IAASB) convened a multi-stakeholder Summit in Paris on 14 April 2025. The Summit focused on the practical implementation of the new International Ethics Standards for Sustainability Assurance (IESSA) and strengthening engagement with the IESBA and the IAASB. The summit reaffirmed the important role that global assurance and ethics standards need to play in building trust in reported sustainability information. Participants agreed on the need for enhanced coordination among the IESBA, the IAASB and IFAC leadership to ensure optimal use of limited resources and continued improvement in the transparency and effectiveness of the due process for standard setting.
On 4 April 2025 Accountancy Europe and IFAC reaffirmed their commitment to high-quality and consistent sustainability assurance and say that IAASB’s International Standard on Sustainability Assurance (ISSA 5000) could fulfil this role.

 

IAASB-IESBA Stakeholder Advisory Council (SAC) Meeting

The Stakeholder Advisory Council, which meets on 5-6 May 2025 in New York, plays an important role by providing strategic-level input and recommendations to both IAASB and IESBA. It also serves as a key forum for engaging with a diverse range of stakeholders. Key discussion topics include deregulation and its potential implications for the IAASB and IESBA’s standards, including those relating to sustainability. View the agenda here and follow along via livestream on YouTube here.

 

ISSA 5000

Back in January 2025 the IAASB and the IESBA launched a joint effort to support effective implementation of their landmark standards aimed at advancing trust and transparency in sustainability reporting and assurance. The standards become effective for periods starting on or after 15 December 2026, with early adoption permitted and encouraged. The IAASB believes the ISSA 5000 is scalable and adaptable to regional regulatory requirements, such as the CSRD, and can be used with any sustainability reporting framework, standard or other suitable criteria including EFRAG’s VSME, and is applicable to all assurance providers and for organizations of all sizes. A suite of implementation support is available here.
To support effective implementation stakeholders are invited to submit implementation questions or matters for the IAASB’s consideration (emulating EFRAG’s Q&A Platform for its ESRS) - read more here. 
CEAOB guidelines on limited assurance on sustainability reporting are available for CSRD engagements. In addition, the European Contact Group (ECG) has published illustrative examples of limited assurance reports for engagements in accordance with the CSRD - see the unmodified illustrative report here and the modified illustrative report here. These examples may require adaptation to align with specific jurisdictional requirements and standards.
Based on its own examination of reports Corporate Disclosures says the early indications are that the Big Four has captured the majority share of the CSRD assurance market and concludes that the market concentration may be worse than the financial audit market. This EFAA for SMEs paper looks at the role of small and medium-sized accountancy practices (SMPs) in the fast emerging market for assurance on sustainability reporting.

 

IESSA

In lockstep with the IAASB, the IESBA announced that its new IESSA and other new sustainability-related provisions establish a strong ethical foundation for sustainability reporting and assurance engagements. The IESBA has commenced implementation support activities in earnest including material that can be access here and a webinar series on the new standards - access the recordings and presentation slides here.

We support the timely global adoption and effective implementation of the ISSA 5000 and IESSA but urge close monitoring of the impact on value chain reporting and assurance and taking corrective action as necessary.

Disclosure of Carbon Instruments

As Corporate Disclosures report while carbon-related instruments - financial and policy tools that are used to manage, reduce or offset GHG emissions - are increasingly being used to help businesses meet their climate goals, a study by the Association of Chartered Certified Accountants (ACCA) and the University of Glasgow reveals that most high-emitting companies are not including information on carbon instruments in their financial statements or annual reports.

ISSB Update
The ISSB Update, summarising the April 2025 ISSB meeting, is now available. You can also listen to Chair Emmanuel Faber and Vice-Chair Sue Lloyd in the latest episode of the ISSB podcast in which Faber and Lloyd share insights into developments from the ISSB, including: the recently launched Roadmap Development Tool; the Integrated Thinking and Reporting Conference and stakeholder engagements in Tokyo; and key takeaways from the April 2025 ISSB meeting.

Revision of IFRS S2
In response to market feedback, the International Sustainability Standards Board (ISSB) has published an Exposure Draft (ED) proposing targeted amendments to IFRS S2 Climate-related Disclosures that would provide reliefs to ease application of some of the requirements related to the disclosure of greenhouse gas (GHG) emissions. The ED is open for comment until 27 June 2025. Find out more and submit comments here.

IFRS S3
At a recent conference held by Institute of Chartered Accountants of Scotland on 23 April 2025 Corporate Disclosures heard that the ISSB has not started standard setting activitity for an IFRS S3, and there is at this stage no clarity on how many standards it intends to issue, within which timeline, and indeed what the overall architecture of that body of work would look like.

IFRS Foundation Adoption and Implementation Support
The IFRS Foundation continues to provide and enhance adoption and implementation support. It has now held nine webinars on in its sustainability disclosure series, “Perspectives on Sustainability Disclosure”. Links to the slides and recording are now available for the latest webinar on 'Ramping up systems and processes for sustainability data’. The IFRS Foundation has also made it possible to access SASB Standards in both PDF and HTML formats, free of charge for non-commercial use, in the new SASB Standards Navigator. Following the publication of educational material on ‘Sustainability-related risks and opportunities and the disclosure of material information’ the IFRS Foundation has now released a webcast series to further support companies with this task. And finally, on 16 April 2025 the IFRS Foundation hosted the ‘Introduction to IFRS Sustainability Licensing’ webinar event: links to the slides and recording are now available. 

 

Due Process Consultation

EFRAG has published its final Comment Letter on EFRAG on the IFRS Foundation’s proposed amendments to the Due Process Handbook, released in December 2024. EFRAG’s letter urges, amongst other things, the development of a conceptual framework dedicated to sustainability reporting and the establishment of an interpretations committee for sustainability reporting.

We believe that the IFRS Foundation ought to focus on implementation of its present suite of standards and think about how best to help non-listed SMEs respond to requests for sustainability information from larger companies and finance providers. The VSME developed by EFRAG for the European Commission may have a role to play. The IASB recently updated the IFRS for SMEs, its financial reporting standard for non-publicly accountable entities.

IFAC’s GHG Emissions
IFAC and its members, professional accountancy organizations (PAOs), are working together to promote sustainability. With help from Greenly, a Certified B-Corp, IFAC is pursuing its own sustainability targets, measurements, and reporting. IFAC now boasts greater visibility of its scope 3 emissions, enhanced data quality and detailed emissions tracking, and reduced emissions through smart technology choices, optimized travel planning and hybrid working. IFAC invites stakeholders to watch its testimonial and read its case study to learn how it aligns its internal operations to complement its advocacy for sustainability reporting and assurance. IFAC says its aims “to inspire other small associations to be proactive and not let the pursuit of perfection get in the way of starting!”

PAOs
Through a combination of advocacy, education, and direct action, PAOs are making a meaningful contribution to the sustainability agenda. Read about the progress several IFAC members have made on their sustainability journeys here and read this IFAC Gateway article about how PAOs can can lead the way to net zero. IFAC has a catalogue of publicly available sustainability courses and certifications offered by PAOs on demand, for a fee or free, to help accountants gain knowledge.

SMEs
The IFAC Small Business Sustainability Checklist comes with a dedicated web page that provides material on sustainability reporting, advisory, assurance, and education and training. An online version of this checklist is coming soon. 

Revision of SMOs
On 14 April 2025 IFAC launched a public consultation on targeted revisions to its Statements of Membership Obligations (SMOs), a cornerstone of IFAC and its members’ commitment to a strong and sustainable global accountancy profession. The proposed revision includes the need for PAOs ro adopt or work toward the adoption of all IFRS Standards issued by the ISSB. Feedback can be provided via a response template form and the consultation is open until 8 August 2025. The revised SMOs are expected to take effect on 1 January 2026. Read more here.

 

IESs

In late April 2025 IFAC hosted webinars, with translation into multiple languages, on the revisions to the International Education Standards (IESs) to help stakeholders understand the changes including those to accommodate sustainability. Recordings in each language will be available in early May 2025. Read more here.

We believe the accountancy professions must do more, with more urgency, to advocate for and faciliate sustainability. Sustainability is the defining public interest issue of the C21st and the accountancy profession needs to show bold leadership. Moreover, the leadership and convenors of the profession – IFAC, regional network partners and its PAOs – must practice what they preach.

The ACCA has launched a survey designed to help you evaluate and enhance your readiness to meet the increasing demand for financial and sustainability information. Respondents will be able to benchmark their readiness against their peers. The survey will close on 5 May 2025.

13 May: European Corporate Governance Conference 2025, Warsaw
14 May: ACCA Virtual Conference Sustainability Education: A Key Driver for EU Business Competitiveness
15 May: Good Governance Academy 13th Colloquium, ‘Sensible Regulation and Sensible De-regulation’
22 May: 25th Brussels Economic Forum, Brussels
22 May: EFAA 2025 International Conference, Marseille
10-11 June: Reuters Sustainability Reporting Europe 2025, London
23-24 June: IFRS Foundation Conference, London
30 October: IFRS Sustainability Symposium, London

6 November: Good Governance Academy 14th Colloquium