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On 22 October 2025 the European Parliament voted to reject the mandate adopted by the Legal Affairs Committee (JURI) on 13 October on simplified rules for sustainability reporting and due diligence obligations, by 309 votes in favour, 318 against and with 34 abstentions. As a result, and in line with Rule 72(3) of the Parliament’s Rules of Procedure, MEPs will vote on amendments to the file at the upcoming plenary session in Brussels on 13 November 2025. There is a real risk that EPP will propose even more carveouts and higher thresholds and seek support from the far right: this has prompted the Responsible Business Alliance to issue a statement calling for the CSDDD to be preserved. This Corporate Disclosures article assesses the impact of the rejection vote while this webinar looks at how the JURI position was arrived at. After the plenary vote talks can then start with EU governments which already adopted their position on 23 June 2025. The aim is to finalise the Omnibus legislation by the end of 2025 (see more under ‘Next Steps’ below).

Final Positions
A high level summary of the respective positions of the European Commission, European Council and European Parliament is available in this LinkedIn post. The European Commission position is as per its proposal of 26 February 2025 (see ‘Background Explainer’ box and here) and the European Council agreed its position ('negotiating mandate') on 23 June 2025, which is broadly aligned with that of the Commission, as outlined here.  Perhaps most significantly from a reporting perspective is the JURI’s proposed reduction in scope of the CSRD to companies that have over 1,000 employees or a net annual turnover of €450m. While aligned with the European Council this goes further than the Commission proposal of 1,000 employees and either €50m turnover or a balance sheet total of €25m.

 

Background Explainer In February 2025 the European Commission announced the Omnibus Proposals. The Questions and answers on simplification omnibus I and II (Q&A) and this DG FISMA newsletter summarize the proposals. The Omnibus 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. Member states have until 31 Dec 2025 to transpose this into national law. See ACCA’s Q&A. 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 "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 17 other industry associations, has welcomed this delegated act and has urged the European Parliament and the Council of the EU to swiftly confirm their support so that it can quickly enter into force and so provide legal certainty for Wave 1 companies. Many raised concerns around due process and the lack of evidence in arriving at the Omnibus proposals. Some feel there should have been a complete ‘stop the clock’ giving time for a full proposal to be developed. For example, the study ‘Bad process leads to bad outcomes’ concludes that the Omnibus will fail to ease regulatory burden on business. The EU Ombudswoman is currently investigating the allegation that due process was lacking. An initiative by the academic community – the Copenhagen Declaration now has over 200 signatories - calls for evidence-based policy-making in the context of the ongoing Omnibus process. Moreover, there is a lot of opinion and evidence in favor of limiting the extent of simplification and deregulation. European Central Bank (ECB) President sent this letter to the European Parliament expressing her concerns over the proposal to narrow the scope of the CSRD. And come early October 2025 this joint statement issued in July 2025, urging EU policymakers to preserve the core of the EU sustainability framework, boasted over 475 signatory organisations. The statement calls on EU policymakers to, amongst other things, maintain the principle of double materiality in reporting, include companies with 500+ employees in the scope of CSRD, and maintain risk-based corporate due diligence and climate transition plans. The Commission has issued a list of Level 2 regulations that have been deemed “non-essential”, and will therefore be deprioritised, which includes the Delegated Act on the standard for non-EU companies. This was due to be adopted in 2026 but will not now be adopted before October 2027. Some are concerned this will place EU companies at a disadvantage to non-EU companies as the latter will have fewer reporting obligations. Member states, meanwhile, continue to implementing the pre-Omnibus CSRD. See Accountancy Europe’s CSRD tracker as at 26 September 2025, here and Ropes Gary as at 28 October 2025 here.

 

Next Steps
The outcome of the Omnibus debate will be determined by an informal negotiation between the European Commission, European Council and European Parliament (‘trilogue’) that will start as soon as the Parliament agress its position on 13 November 2025. For the Omnibus package, the final trilogue session is currently scheduled for 8 December (subject to change). Realizing the extra-territorial impacts of the CSRD and CSDDD the US is likely to exert political pressure. In this LinkedIn post Andreas Rasche shares a letter that urges META’s Mark Zuckerberg to “immediately comply with America’s laws and the Trump Administration’s policies and disavow the DEI and ESG directives imposed by the CSRD and CSDDD.”

Denmark, having assumed the rotating Presidency of the Council of the European Union for six months starting 1 July 2025, will preside over the trilogue negotiations and is keen to get it completed during its tenure and its ruling party welcomes efforts to cut red tape. Once approved member states will then transpose and implement.

 

We have mixed views on the Omnibus proposal and are disappointed at what the final outcome is likely to be. The package fails to recognize and leverage the competitive advantage to be gained from the EU leading the global sustainable transition. We welcome the significant simplification of the sector agnostic ESRS. We think the 1,000 employee ESRS reporting threshold is too high. For companies employing 250-1,000, where the threshold looks likely to land, we suggest they be required to report on the basis of a new voluntary reporting standard (the ‘so called Omnibus VSME’) develop using the VSME with an additional module importing some provisions from the simplified ESRS including some materiality assessmen, that is VSME + new module. The reporting hierarchy would then comprise three tiers as follows: • Less than 250 employees – voluntary reporting using VSME with no assurance • 250-1,000 employees – voluntary reporting using ‘Omnibus VSME’ with no assurance • More than 1,000 employees – mandatory reporting using ‘simplified ESRS’ with assurance

 

Omnibus Impact on Current Reporting
Watch this Position Green webinar held on 30 October 2025 on the Omnibus process and how it affects the reporting of EU companies right now.

ESRS Simplification
On 29 Sepember 2025 the EFRAG public consultation on revised and simplified exposure drafts (EDs) of the ESRS closed. This EFRAG factsheet summarises the key proposed changess. EFRAG must submit its final technical advice, including a cost benefit analysis, to the European Commission by 30 November 2025. EFRAG now has the challenging task of refecting the feedback in the final drafts to be submitted to the Commission. EFRAG has received a large number of responses, mainly positive, and conducted a number of outreach events. This Corporate Disclosures article looks back on argiably the most important of these outreach events.

Sustainability Reporting Board Chair
In late  September 2025 the Legal Affairs Committee (JURI) of the European Parliament had an opportunity to hear from and cross examine the three candidates  shortlisted following the European Commission’s call for applications for the SRB chair position. The favorite appears to be Lopatta. The final hurdle is EFRAG's general assembly, scheduled for 15 December 2025.

ESMA’s Sustainability Reporting Priorities
On 14 October 2025 the European Securities and Markets Authority (ESMA) issued its annual Public Statement setting out the European common enforcement prioroties for the 2025 financial reports of issuers admitted to trading on EEA markets. ESMA gives guidance to companies by setting expectations for what it will focus on in companies’ sustainability statements including materiality assessments and scope and structure of sustainability statements.

ESMA’s Analysis of ESRS Application
On 15 October 2025 ESMA published its analysis of how large, listed companies applied the ESRS in their 2025 sustainability statements. The key findings include: around 60% of the 91 analysed companies sufficiently explained how they conducted their double materiality assessment, an ewncoraging start but with room for progress; nearly 90% described their Impacts, Risks and Opportunities (IROs), with most mapping them to ESRS topics; 90% listed the disclosure requirements they complied with; and a few qualified opinions and emphasis of matter paragraphs were noted, mainly linked to materiality judgments.
ESMA’s recommendations to reporting companies include: avoid boilerplate language and clearly explain materiality judgments; map material IROs to ESRS matters (ESRS 1 AR16) using consistent terminology; disclose Policies, Actions, Targets (PATs), and Metrics (or clarify their absence) for each material topic, including entity-specific ones; and strengthen links between IRO disclosures and topical disclosures to improve usability.
ESMA also shared recommendations with EFRAG as part of their efforts to simplify the ESRS including: encouraging company-specific disclosures on how materiality assessments are applied; eEnsuring consistency between material IROs and topical disclosures; and considering including a summary table linking IROs, related sustainability matters and PATs to make reporting clearer and simpler.

Sustainability Reporting Standards for SMEs
Since the European Commission officially adopted EFRAG’s Voluntary Sustainability Reporting Standard for non-listed Micro, Small, and Medium-sized Enterprises (VSME) as a Recommendation in late July 2025 EFRAG has been busy mobilizing implementation support (access the Commssion’s press release, Q&A, and the recommendation here and the standard, explainer videos, digital templates, and guidance on EFRAG’s website here. This Corporate Disclosures article looks at the ecosystem that EFRAG is buidling to support the application of the standard.
On 28 October 2025 EFRAG published an event report, recordings (in 16 languages), and presentation slides from its 6 October event “VSME Standard in Action: From the European Commission’s Recommendation to Digital Solutions”. The event brought the VSME to life, showing how it moves from policy to practical application across Europe. Over 800 participants joined experts and practitioners in dynamic discussions on the European Commission’s July 2025 Recommendation, GHG tools, VSME platforms, and the VSME digital template. Read more here.
Previously, in late September, EFRAG released two complementary reports to support the application of the VSME. The first report provides practical support to SMEs that wish to report their GHG emissions based on VSME. The report maps 100 digital tools (e.g. GHG calculators, geolocation tools) that answered EFRAG’s call for interest and provides a comparative analysis of shortlisted GHG calculators that met pre-defined criteria described in the report. The shortlist of GHG calculators offers practical support to SMEs that wish to report their GHG emissions based on VSME.
The second report provides an overview of the 223 platforms and initiatives for SMEs reporting that answered EFRAG's call for interest. The report focuses on the comparison of the characteristics of those shortlisted platforms and initiatives that met pre-defined criteria and that completed a self-assessment grid to test VSME alignment. In this LinkedIn post Gabriella Lovas takes a closer look.
Finally, on Tuesday, 21 October 2025, the House of Sustainability (Luxembourg) organised an introductory workshop in collaboration with EFRAG on the VSME. Watch the workshop here.

Omnibus VSME
As previously mentioned the Omnibus proposals mean changing the scope of CSRD so the threshold for mandatory use is significantly raised, likely to companies with more than 1,000 employees. That leaves a reporting gap for companies emplying between 250 and 1,000. The proposal in the Omnibus is to use the VSME as a basis for a new sustainability reporting standard for this category of companies, so called ‘Omnibus VSME’. The Commission has said that once the Omnibus is finalized, the ‘Omnibus VSME’ will be developed. This standard is now the subject of intense debate and it is unclear if and when it will be developed.
As Corporate Disclosures reported Eurosif and others have released a joint statement urging EU policymakers to ensure there is a “credible and proportionate voluntary sustainability reporting standard” for companies with over 250 employees that are not subject to the CSRD under the revised scope. The joint statement says that the recently endorsed VSME standard is unlikely to be suitable “as it lacks the granularity, consistency, and reliability that investors and other sustainability information users need for financing purposes.” Hence, the statement recommends having a voluntary standard for small and mid-cap companies based on a subset of datapoints in the revised ESRS and which maintains a mandatory “but proportionate” materiality assessment. Others argue that the EU develop the standard by building on the VSME, perhaps adding a module for larger entities. Significantly the new standard may yet be the value chain cap, setting limits on the information in scope companies can ask from smaller companies in their value chain.  

UN Global Compact Promotes VSME
The UN Global Compact believes the VSME offers SMEs a way to gain strategic advantage from sustainability reporting, and adds: “Whether you are responding to ESG requests from customers, banks, or business partners, VSME helps you report efficiently without unnecessary complexity.”
Read their latest article for practical tips on how to get started with VSME here.

World Bank Webinars on VSME
The World Bank Centre for Financial and Sustainability Reporting Reform (CFRR), in partnership with EFRAG, hosted webinars on 16 and 23 October 2025 on the VSME. The webinars raised awareness among regulators, policymakers, market participants, SMEs, and other stakeholders in European Union (EU) accession and EU neighborhood countries on leveraging the VSME Standard to address key sustainability reporting challenges. Access the slides and recordings here.

EFRAG Updates
EFRAG’s Sustainability Reporting Update podcast for September is available hereand the Financial Reporting Update podcast is here. The September 2025 EFRAG Update is also available to read here.

Friends of EFRAG

EFRAG continues to add to its long list of Friends of EFRAG. As a friend of EFRAG entities can give their individual support to EFRAG’s mission and support EFRAG’s reporting activities. Read more 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. The revised standards are much simpler and clearer than the original ones. Meantime, the VSME is a timely and high quality addition to the suite of ESRS. The VSME seems to provide a good place to start as the basis for a standard for voluntary use by companies with 250-1,000 employees (so called ‘Omnibus VSME’).

European Union
While 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, the proposal does remove 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 Commission 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 ‘Omnibus VSME’.
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.

ISSA 5000
Since the IAASB and the IESBA launched in January 2025 a joint effort to support effective implementation of their landmark standards aimed at advancing trust and transparency in sustainability reporting and assurance both Boards have been busy promoting adoption of the standards, coordinating translations, and ramping up implementation support.
The International Standard on Sustainability Assurance (ISSA 5000) becomes 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.
Translations of ISSA 5000 - French, Lithuanian, Estonian, and Finnish with Arabic and Spanish coming soon - are available here. ISSA 5000 FAQs are available in French here.
The IAASB says there is growing momentum around the world as jurisdictions continue to adopt ISSA 5000. Some jurisdictions are making sustainability assurance mandatory, while others are taking a voluntary approach – each reflecting its own regulatory context and priorities. See this LinkedIn post for the latest on jurisdictional adoption: this webpage includes ‘ISSA 5000 Jurisdictional Adoption’.
The IAASB’s ISSA 5000 Adoption and Implementation resources continue to grow. During early October 2025 the IAASB held a three-part global webinar series designed to assist stakeholders as they adopt and implement ISSA 5000. Access the recordings here. Most recently the IAASB added a new Frequently Asked Questions (FAQ) publication to its catalogue of adoption and implementation resources for ISSA 5000.The FAQ explores the relevance of ISSA 5000 to sustainability assurance engagements in the EU, providing a high-level understanding of how the standard supports consistent, high-quality assurance – enhancing confidence in sustainability information prepared in accordance with the ESRS. It also outlines how ISSA 5000 could be applied in assurance engagements required under the CSRD and highlights key EU-specific considerations, including double materiality, scalability, and interoperability with other frameworks.

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.

The IESBA’s IESSA Implementation Resources continue to be expended, most recently in September 2025 with IESBA’s release of two new staff publications - Questions and Answers on Using the Work of an External Expert and Proportionality of the IESSA. These publications explain key aspects of the standard related to using the work of an external expert and the proportionality of the ethics and independence provisions for sustainability assurance in the IESSA.

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 deemed disproportionate, modifying the standards with timely limited scope amendments.

 

World Business Council for Sustainable Development (WBSCD) Report
According to the WBCSD’s "Reporting Matters 2025: Embedding change, accelerating impact"report 83% of reports disclosed a double materiality assessment (DMA) in 2025, compared to 77% in 2024 and 55% in 2023. Furthermore, the report finds 48% of reports indicate CSRD/ESRS alignment verses 11% indicating ISSB alignment. While ISSB is more prevalent in APAC, CSRD is more prominent in EMEA. In the Americas, 19% of reports indicate CSRD preparation and 9% are preparing for ISSB. On 4 November 2025 the WBCSD held a launch event: access the recording of the moning session here and the afternoon session here. The presentation deck is here.

OECD Global Corporate Sustainability Report 2025
On 29 October 2025 the OECD issued its ‘Global Corporate Sustainability Report 2025’. Based on data from LSEG, Bloomberg and MSCI, it assessed the filings of 44,000 public companies representing US$125 trillion in market capitalisation. The study reveals that in 2024, listed companies representing 91% global market capitalisation (market cap) reported sustainability-related information, up from 85% in 2022. Furthermore, the overall number of public companies that report has also continued to rise– from 9,600 in 2022 to 12,900 in 2024. This Corporate Disclosures article takes a closer look at the report’s findings.  

IFRS Sustainability Symposium 2025
At the opening of this event on 30 October 2025 ISSB Chair announced the expansion of the Jurisdictional Working Group, newly named as the Jurisdictional Adopters Working Group, a key initiative to facilitate multilateral discussions among regulators on how ISSB Standards can serve as a global passport, benefiting capital markets worldwide and addressing emerging cross border issues. Faber also announced a new Jurisdictional Rationale Guide for the adoption or other use of ISSB Standards and accompanying Jurisdictional Rationale Tool exploring jurisdictions’ experiences and their reasons for introducing ISSB Standards, such as strengthening capital markets by informing investors’ capital allocation decisions and improved cost effectiveness and efficiencies for companies.

ISSB Adoption Status
As at the start of October 2025 over 30 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. This IFAC article looks at Indonesia’s adoption roadmap. Many countries are extending transitional reliefs to give time for implementation.

ISSB Update 
The ISSB Update, summarising the November 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 the podcast, Emmanuel and Sue share insights into key ISSB updates, including how the ISSB will draw on the TNFD framework to meet investors' common information needs as it proceeds with standard-setting for disclosures about nature-related risks and opportunities (see next).

ISSB’s Next Standard
This Corporate Disclosures article takea a closer look at the ISSB’s November meeting where it decided to proceed with the development of IFRS S3. The Task Force for Nature-related Financial Disclosures (TNFD) has welcomed the ISSB decision on nature-related standard setting drawing on the TNFD’s framework.

SASB Amendments
The public consultation on proposed amendments to SASB Standards closes on 30 November 2025 (see the recording and slides from a recent explainer webinar).

IFRS Foundation Adoption and Implementation Support
The IFRS Foundation continues to provide and enhance adoption and implementation support. It has held 12 sessions in its ‘Perspectives on Sustainability Disclosure’ webinar series. Episode 12 explored how organisations use climate-related scenario analysis to assess and disclose their climate resilience in line with IFRS S2. View all recordings here.

IFRS Foundation Capacity Building
On the eve of COP 30 the IFRS Foundation has released the Capacity Building Programme Activity Report for 2025 outlining its work to support the global use of ISSB Standards since COP29.  In 2026 the IFRS Foundation plans to deepen implementation support for companies and enhance regulatory adoption support.  

IPSASB Work Program Consultation
The International Public Sector Accounting Standards Board® (IPSASB®) has published its Work Program Consultation having previously set its overall strategy for the period 2024-2028 through a similar public consultation. The consultation document identifies two potential sustainability reporting projects. Staff recommend that IPSASB develop a general sustainability-related disclosure standard, which would leverage its private sector counterpart – the ISSB's IFRS S1 – and set out general principles for sustainability disclosures in the public sector. Read more here.

Taskforce on Nature-related Financial Disclosures (TNFD)
Building on market best practices for climate transition plans, the TNFD has published guidance on nature in transition planning.

Global Reporting Inititaive (GRI)
GRI has started a public consultation to revise GRI 201: Economic Performance with comments due by 17 December 2025. Read more here.

 

Transition Plans

The International Transition Plan Network (ITPN has launched this new tool to track transition plan regulations across countries. The overview reveals that mandatory regulation is increasing despite the likely slow down in the EU. Mandatory adoption of transition plans is becoming the norm and gaining momentum. Most new frameworks align with ISSB standards though TCFD still features in some. There is a real risk the EU will fall behind in the global race toward credible transition planning.

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 recently finalized VSME may prove to be a useful basis for a global standard. The IASB recently updated the IFRS for SMEs, its financial reporting standard for non-publicly accountable entities.

 

IFAC have added a translation tool to its Small Business Sustainability Checklist to make it accessible in 250 languages.

12, 17 & 18 November: EFRAG Workshops on Users’ Needs for Intangibles Reporting, Online
13 November: Webinar: Real-world use cases of licensing ISSB Standards, Online
1 December: Corporate Disclosures 2025, London
4 December: EFRAG Conference on Amended ESRS, Brussels and Online

2026

17-20 November: World Congress of Accountants (WCOA) 2026, Seoul, South Korea