Recap
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) and this DG FISMA newsletter summarize the proposals.
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).
On 11 July 2025 the Commission adopted the "quick fix" ESRS Delegated Act that pauses additional ESRS phase-in data points for CSRD wave-one undertakings by two years. As the press release  explains this means that all CSRD Wave 1 companies will be allowed to exclude ESRS E4, S2, S3, and S4 from their sustainability reporting for financial years 2025 and 2026. Furthermore, Wave 1 companies with more than 750 employees will have the same phase-in provisions which currently apply to firms with up to 750 employees. The Commission says that this "quick fix" became necessary as Wave 1 companies were not included into the "Stop-the-Clock" Directive that was part of the Omnibus. Hence, this Delegated Act is supposed to ensure that Wave 1 companies do not face additional requirements. Accountancy Europe, together with other 17 industry associations, has welcomed this delegated act and has urged the European Parliament and the Council of the EU to swiftly confirm their intention not to object, ensuring timely entry into force and legal certainty for affected companies. The joint call says this delegated act is essential to provide legal certainty for wave-one companies, who remain subject to the original CSRD timeline.

Progress
Omnibus I, dubbed ‘stop-the-clock’ proposal, entered into force on 17 April 2025. Member states now have until 31 Dec 2025 to transpose this into national law. Ropes and Gray’s CSRD Tracker, last updated at 30 June 2025, provides a snapshot of progress made by member states: some 20 countries have adopted legislation implementing the pre-Omnibus CSRD (at least in part) and another six have proposed legislation. Check out the latest version of Accountancy Europe’s CSRD tracker here. provides a snapshot of progress made by member states: some 20 countries have adopted legislation implementing the pre-Omnibus CSRD (at least in part) and another six have proposed legislation. Check out the latest version of Accountancy Europe’s CSRD tracker here.

Analysis and Reactions
The EU is setting the global agenda for sustainability regulation with global companies increasingly modelling themselves on the EU standards. Unfortunately the Omnibus threatens this leadership. While the debate around the Omnibus continues to intensify, on the whole it seems more stakeholders would prefer the substance of the CSRD and CSDDD to be largely left intact. On 2 July 2025 198 signatories, including many businesses and investors, issued a joint statement (still open for signatures) urging EU policymakers to preserve the core of the EU sustainability framework as this is essential to ensure future growth and competitiveness. The statement calls on EU policymakers to: maintain the principle of double materiality in reporting; retain alignment with international reporting standards; include companies with 500+ employees in the scope of CSRD; ensure that the value chain cap allows for the constructive exchange of sustainability information; maintain risk-based corporate due diligence; and safeguard the core elements of CSDDD, such as climate transition plans. These proposals echo those of the European Central Bank and an alliance of German organizations, including the Accounting Standards Committee of Germany (DRSC), that has published a position paper on the Future of Sustainability Reporting promoting sustainability reporting.
Some have raised concerns around due process and the lack of evidence, most notably the study of Reporting Obligations, ‘Bad process leads to bad outcomes’, commissioned by the European Parliament’s Policy Department for Justice, Civil Liberties and Institutional Affairs at the request of the JURI Committee and presented to the JURI Committee’s public meeting on 13 May 2025 by J. Scott Marcus from CEPS (Centre for European Policy Studies). The study concludes that the Omnibus will fail to address regulatory overlaps and to ease regulatory burden on business and that the proposals were not supported by the evidence. Implementation guidance, however, will help needed to address the overlaps between the CSRD, CSDDD and the Taxonomy. The position of right wing MEPs, that the legislation is too burdensome, does not seem to be borne out by the evidence.

Timing and Approval
The outcome of the Omnibus debate will be determined by an informal negotiation between the European Commission, European Council and European Parliament (‘trilogue’ since three parties as compared to the two in a dialogue!). This negotiation is expected to commence in October 2025 with the objective of finding a final agreement by the end of 2025 or in early 2026. On 1 July 2025 Denmark assumed the rotating Presidency of the Council of the European Union for six months and so will preside over the trilogue negotiations. Final approval will then be followed by national transposition and implementation.

Positions
As of 25 July 2025 here are the respective positions (a summary by Frank Bold is available here):

• European Commission – as per its proposal of 26 February 2025 that is summarized here.
• European Council – agreed its position ('negotiating mandate') on 23 June 2025, which is broadly aligned with that of the Commission, as shown here.
• European Parliament - continues to develop its position with the Legal Affairs Committee (JURI) taking the lead. The JURI Committee rapporteur Jörgen Warborn (EPP/Sweden), who prefers going further than the EC is proposing leads the effort to agree the EP’s position, for example he is advocating for the CSRD scope to be companies employing 3,000 or more: read his views in the Financial Times here. The JURI Committee, and the MEPs and their respective parties more generally, are deeply divided on the Omnibus. JURI began shadow negotiations on 15 July 2025 and, as Corporate Discloures reports, the scope of CSRD is emerging as one of the most contentious issues. Pproposals range from CSRD reporting thresholds of 250 to 10,000 employees and some doubt a compromise is possible. Additional JURI Committee meetings are scehduled for 1 and 22-23 September 2025. The JURI Committee is expected to adopt its position by 13 October 2025, ahead of a planned EU Parliament plenary vote in November. Only then can trilogue negotiations start.

Impact of Various Positions
Accountancy Europe, that has has a hub dedicated to the Omnibus package here, has compiled a table showing the number of companies impacted under the CSRD definition, the European Commission's Omnibus proposal, and the European Parliament’s JURI Committee draft report by MEP Jörgen Warborn. Raising the thresholds would leave a third of EU member states with fewer than 10 companies in scope.
On 24 July 2025 Andreas Rasche et al. published the paper ‘Scenarios for CSRD Scope Amendments - Advancing Reporting Scope while Reducing further Burden’. The paper examines how many companies remain in scope under the different Omnibus positions: the more extreme positions would exempt 90-94% of companies from the CSRD, something the authors consider to be deregulation not simplification. They propose a two-tiered system: companies with 500–1,000 employees (Tier 1) would follow a lighter reporting regime without limited assurance, while firms with over 1,000 employees (Tier 2) report under the revised ESRS with limited assurance. This would bring 6,853 companies back into scope (still 65% less than the existing CSRD) and provide a more cost effective solution for a larger number of companies. Read a summary in this LinkedIn post.

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. As reported below assurance is critical to the reliability of information disclosed.

Until the targeted assurance guidelines are issued assurance providers can consult the CEAOB guidelines on limited assurance on sustainability reporting. 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 may need adapting to align with specific jurisdictional requirements and standards.

 

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 simplification of the sector agnostic ESRS. We question the merits of the 1,000 employee ESRS reporting threshold: 500, like the extant NFRD, might strike a better balance. For companies employing more then 250, and up to wherever the ESRS threshold lands, we suggest they be required to report on the basis of the VSME with an additional module for companies with more than 250 employees, that is VSME + new module. This would essentually be an ‘ESRS for Mid-Caps’. The reporting hierarchy would then be as follows: Less than 250 employees – voluntary reporting using the VSME with no assurance 250-1,000 employees – mandatory reporting using ESRS for Mid-Caps with assurance More than 1,000 employees – mandatory reporting using ESRS with assurance

 

ESRS Simplification
On 31 July 2025 EFRAG published the revised and simplified Exposure Drafts of the ESRS, launching a to gather feedback from stakeholders across the EU corporate reporting ecosystem. This major step follows the European Commission’s Omnibus initiative and its formal request to EFRAG in March 2025 to deliver a critical simplification to the ESRS adopted in 2023. The objective is to make sustainability reporting under the CSRD more manageable while preserving its relevance and alignment with the European Green Deal.
EFRAG has streamlined the double materiality assessment, reduced overlaps across standards, clarified language and structure, and removed all voluntary disclosures. New relief mechanisms have also been introduced, such as exemptions where reporting would cause undue cost or effort. In total, mandatory datapoints (to be reported if material) have been cut by 57%, and the full set of disclosures—mandatory and voluntary—reduced by 68%. The overall length of the standards has been shortened by over 55%.  

The public consultation runs from 31 July to 29 September 2025. To support robust dialogue, EFRAG will organise or co-organise outreach events throughout September and October, gathering further feedback ahead of its final technical advice to the European Commission, due by 30 November 2025. In parallel, EFRAG performs a cost benefit analysis and targeted field tests which are also open to participation from stakeholders. Access the 60 day public consulation survey here.
On 10 July 2025 the Taskforce on Nature-related Financial Disclosures (TNFD) put forward a proposal to EFRAG that it believes could aid interoperability and contribute to simplification for undertakings subjwct to the CSRD. The core of the TNFD’s proposal – there are other aspects - is to consider consolidating the current nature-related standards (E2-E5) into one integrated nature standard (a new ESRS E2) covering all realms of nature - land, freshwater, oceans and atmosphere.

SRB Chair Nominees
In April 2025 the European Commission published a call for applications for the Sustainability Reporting Board (SRB) chair position. Three candidates have now been formally shortlisted: Kerstin Lopatta, SRB member and its interim chair before the appointment of De Cambourg; Adam Pradela, CFO Corporate Sustainability at DHL Group; and Chiara del Prete, current chair of EFRAG's Sustainability Reporting Technical Expert Group (SR TEG). Learn more in this Corporate Disclosures article (free subscription). The European Parliament will deliberate in September.

ESRS State of Play
On 23 July 2025 EFRAG launched its new "EFRAG 2025 State of Play" portal — a live, interactive platform presenting key insights from its latest market study on the early implementation of the ESRS under the CSRD. The portal provides access to detailed results via a statistics dashboard and repository of the 656 analysed ESRS sustainability statements issued in 2025 collected between 1 January and 20 April 2025. Key findings include: only 10% of companies identified all 10 topical ESRS standards as material with Climate Change (E1), Own Workforce (S1), and Business Conduct (G1) the most commonly disclosed; 97% involved internal stakeholders in materiality assessments, but engagement with broader societal stakeholders remains rare; 55% of companies disclosed a climate transition plan, though approaches and formats vary; sustainability statements vary widely in length (depending on countries, from 70 to more than 200 on average) with financial institutions producing longer reports on average; and biodiversity and internal carbon pricing remain limited in disclosures while human rights incidents are rarely reported despite other social data being present. Read this analysis of the findings by Corporate Disclosures. Other organizations, such as Datamaran and Frank Bold, have also conducted studies of the sustainability reporting practices of CSRD Wave 1 companies and found the burden of reporting to be quite modest.   

Sustainability Reporting Standards for SMEs
On 30 July 2025 the European Commission officially adopted EFRAG’s Voluntary Sustainability Reporting Standard for non-listed Micro, Small, and Medium-sized Enterprises (VSME) as a Recommendation. EFRAG had submitted the VSME to the Commission in December 2024. Access the Commssion’s press release, Q&A, and the recommendation in English, French and German here. Access the standard, explainer videos, digital templates, and guidance on the official EFRAG VSME webpage. This ACCA article takes a closer look at the standard.
The Commission has advised that 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. There is concern, however, as reported by Corporate Disclosures as to whether and to what extent the VSME will be modified to suit larger companies not least because this standard is the proposed value chain cap for SMEs. EFRAG could rework the VSME and create some incremental requirements, by way of an additional required module for companies employing 250 up to the revised ESRS reporting threshold. This would be in line with the Commission’s proposal to introduce a new mid-cap category.
EFRAG continues to publish material to support implementation of the VSME including: summary educational videos; multiple translations; 10 in-depth educational videos AI-translated into 15 EU languages; and an educational video demonstrating the use of the VSME Digital Template and the Template to XBRL Converter. Access the material here.

EFRAG Update

The June 2025 edition of EFRAG’s Monthly Update Podcasts are available - for Sustainability Reporting on Spotify and YouTube and for Financial Reporting on Spotify and YouTube. The pdf version of the EFRAG Update for June 2025, spanning financial and sustainability reporting, is here.

 

We welcome the simplification of the ESRS – the current standards were developed in a hurry and were over-engineered - and congratulate EFRAG on the rapid progress it has made to date. 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 and, if it is to be the value chain cap, ensure it is not too burdensome by making it much more like the VSME than the ESRS.

PIOB Issues 20th Public Report
BThe PIOB have issued their 20th Public Report. This new edition highlights how the PIOB have advanced the public interest in 2024 through its oversight, nominations, and stakeholder engagement activities. The PIOB’s 2024 Financial Statements are also available.

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. IFAC is strongly advocating for the adoption of the IAASB’s International Standard on Sustainability Assurance (ISSA 5000) and IESSA.
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.
French and Lithuanian translations of ISSA 5000 are now available here. Additional translations are in progress in eight more languages: Arabic, Czech, Estonian, Finnish, Korean, Latvian, Norwegian, and Spanish. Once available these will be availabe here.

IESSA
In concert with the IAASB, the IESBA launched its new International Ethics Standards for Sustainability Assurance (IESSA) and other new sustainability-related provisions establish a strong ethical foundation for sustainability reporting and assurance engagements. These standards will become effective for sustainability assurance engagements on sustainability information for periods starting on or after 15 December 2026, with early adoption encouraged. Read more in this article.

Implementation Support
On 10 July 2025 the IESBA and the IAASB announced the recent formation of two expert implementation groups that will play important roles in supporting the effective implementation and application of the Boards’ recently released global sustainability standards:

• The IESBA’s IESSA Implementation Monitoring Advisory Group (IIMAG) will support the implementation of the International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA) and revisions to the IESBA code for sustainability reporting.
• The IAASB’s ISSA 5000 Technical Implementation Contact Group (TICG) will support implementation of the International Standard on Sustainability Assurance (ISSA 5000).

Each group comprises a diverse and globally representative set of professionals with a high level of familiarity with the standards and direct involvement in implementation-related activities. The IIMAG and TICG will provide regular feedback to the Boards to ensure that emerging issues relating to the implementation of the standards are identified and addressed timely, and that implementation support resources remain relevant and practical. For more information, visit:

• IESBA’s IESSA Implementation Resources – this includes the ‘Frequently Asked Questions (FAQs) on Sustainability Assurance Engagements’, issued jointly by IAASB and IESBA Staff that addresses practical questions about applying ISSA 5000 and IESSA togethe (access the FAQs here) and the IESBA Staff Questions and Answers publication on ethics and independence considerations for practitioners performing sustainability assurance engagements (access here). On 30 July 2025 the staff of the IESBA released two implementation support publications to help sustainability assurance practitioners understand and apply the IESSA: Key Differences Between IESSA and Parts 1 to 4A of the Code that outlines the main differences between the IESSA and the corresponding provisions of the IESBA Code applicable to audits of financial statements; and List of Prohibitions for PIEs in IESSA that sets out the specific prohibitions in the IESSA applicable to sustainability assurance engagements of public interest entities (PIEs).
• IAASB’s ISSA 5000 Technical Implementation Contact Group details
• IAASB’s ISSA 5000 Implementation Resources - in Q3 the IAASB plans to issue illustrative assurance reports, other supplementary guidance, and a webinar series.

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. Similarly the IESBA has also launched a new feedback mechanism to gather implementation insights on the application of the IESSA and related ethics standards in sustainability assurance engagements: a submission form located here is available to collect feedback from practitioners, firms, and other stakeholders.

ACCA & Chartered Accountants ANZ ISSA 5000 Guidance Series

On 8 July 2025 ACCA and Chartered Accountants ANZ published this practical guide to ISSA 5000. This is the first in the series and focuses on materiality. The guide provides guidance through a fictional assurance engagement and is structured around the application of materiality to Scope 1, 2 and 3 greenhouse gas (GHG) emissions.

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, where that impact is considered disproportionate, modifying the standards with limited scope amendments as soon as possible.

 

ISSB Update
The ISSB Update, summarising the July 2025 International Sustainability Standards Board (ISSB) meeting, is now available. You can also listen to the latest episode of the ISSB podcast which covers ISSB guidance on transition plan disclosures, the use of industry-based guidance when applying ISSB standards and upcoming publications and events.

Revision of IFRS S2
The ISSB's consultation on proposed amendments to IFRS S2—focusing on disclosure relief for certain Scope 3 greenhouse gas (GHG) emissions as this webcast explains—closed on 27 June. Corporate Disclosures reports that while the proposal garnered broad stakeholder support, many, including EFRAG in its comment letter, expressed concern about the permanency of the proposed relief and called for transitional measures or defined timelines for review. 

IFRS Foundation Adoption and Implementation Support
The IFRS Foundation continues to provide and enhance adoption and implementation support. On 10 July 2025 it published educational material to help companies understand the role of the ISSB industry-based guidance—which collectively refers to the SASB Standards and the Industry-based Guidance on Implementing IFRS S2—when applying IFRS Sustainability Disclosure Standards.
Also on 10 July 2025 the IFRS Foundation held the 11th episode in the Perspectives on Sustainability Disclosure series, ‘Climate-related targets and transition plans disclosure’, which drew on key messages from the newly published IFRS Foundation educational material, Disclosing information about an entity’s climate-related transition, including information about transition plans, in accordance with IFRS S2 (published on 23 June 2025). Links to the slides and recording are now available. Access the 11 session recordings here.

ISSB Jurisdictional Profiles
Thirty-six jurisdictions have adopted or otherwise used the ISSB Standards or are in the process of finalising steps towards introducing them into their regulatory frameworks. Details on the use of IFRS sustainability disclosure standards by jurisdiction can be found here. In this article of 11 July 2025 Corporate Disclosures say the profiles reveal a somewhat fragmented picture of ISSB adoption: timelines vary and many jurisdictions have built in their own transitional reliefs.
On 25 June 2025 the UK Department for Business and Trade (DBT) launched a public consultation on draft UK Sustainability Reporting Standards (UK SRS), which are based on IFRS S1 and S2 with six proposed adjustments for the UK context as this Corporate Disclosures article explains.

ISSB e-Learning Modules
The IFRS Foundation has released new e-learning modules, accessible for free with an IFRS.org account through the IFRS Sustainability Knowledge Hub, to support companies in getting started with understanding the ISSB Standards. At the end of each module, users have the option to sit a short, multiple-choice assessment to receive a certificate of completion.

SASB Comprehensive Review
On 3 July 2025 the ISSB published two exposure drafts proposing amendments to the SASB Standards and consequential amendments to the Industry-based Guidance on Implementing IFRS S2. This Corporate Disclosures article takes a closer look and ventures that feedback may help the ISSB decide whether to develop further sector agnostic standards to accompany S1 and S2. The SASB standards may gain more utility in the EU if the Omnibus terminates sector specific ESRS.  

GRI Issues EDs
The exposure drafts for Non-discrimination and Equal Opportunity and Diversity and Inclusion of the GRI Topic Standard Project for Labor are available for public comment closing on 15 September 2025. Respondents are invited to provide feedback by completing the online survey. Find out more in the Explanatory Memorandum and the Frequently Asked Questions.

Educational Webinar on SME Sustainability Reporting

On 27 June 2025 IFAC, UNCTAD, the OECD and the World Bank jointly hosted an educational webinar ‘Building Capacity & an Effective Sustainability Reporting Ecosystem for SMEs’. The main highlights, the recording of the event and speakers recommendations are available here.

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, in collaboration with the Edinburgh Group (EG), has launched an online interactive tool to help SMEs embrace sustainable business practices. The tool provides practical steps and can be tailored to fit an SME’s industry sector, lifecycle, and products and services.

On 30 June 2025 the European Securities and Markets Authority (ESMA) published a report on a Common Supervisory Action (CSA) led jointly with National Competent Authorities (NCAs) on sustainability risks and disclosures. The report presents takeaways from a review of entity, and product-level disclosures under the Sustainable Finance Disclosure Regulation (SFDR) and the implementation of sustainability risk policies under EU rules for investment funds. While most NCAs reported an overall satisfactory level of compliance, the exercise revealed areas for improvement and instances of non-compliance, which were addressed through supervisory action. The report also highlights the importance of a future SFDR review introducing clear product categories. Read more about the CSA report here. Read about how an effective SFDR review can improve transparency and support Europe’s competitiveness in this ESMA report.

On 4 July 2025 the European Commission adopted the final version of the simplified EU Taxonomy Disclosure, Climate and Environmental Delegated Acts, with the first draft published as part of the Omnibus initiative. The European Commission proposals introduce a “materiality threshold” allowing companies with less than 10% cumulative revenue, CapEx or OpEx from Taxonomy-eligible or Taxonomy-aligned activities, or if OpEx is deemed non-material, to be exempted from reporting. The proposals also amends the reporting templates by removing 64% of data points for non-financial companies and 89% for financial companies.
The updated Taxonomy Delegated Acts are expected to enter into force and will apply starting 1 January 2026. The European Commission plans a further in depth review of the delegated acts once the current amendments have been adopted. Eurosif is concerned that the introduction of materiality thresholds and the overall reduction in scope could hinder investors’ ability to contribute to sustainable growth. In this article Commissioner Albuquerque talks to stakeholders about their experience implementing the Taxonomy – insight gathered could support efforts to improve the framework.

15 September: IESBA Conference 2025, Lisbon and Online
30 October: IFRS Sustainability Symposium, London
6 November: Good Governance Academy 14th Colloquium

1 December: Corporate Disclosures 2025, London