Summary
- The EU’s Omnibus proposals streamline the CSRD by reducing the number of mandatory ESRS datapoints by more than 50% and improving clarity, readability and interoperability of sustainability reporting
- The CSRD timeline is reshaped, with simplified European Sustainability Reporting Standards (ESRS) expected to be adopted before June 2026 and phased reporting waves for different company categories extfinishing through 2029
- Major simplifications to social disclosures (ESRS S1–S4) reduce granularity, adjust thresholds, streamline metrics and revise requirements across workforce, diversity, wages, social protection and human‑rights‑related reporting
The Corporate Sustainability Reporting Directive (CSRD) is an EU regulation that requires companies to disclose information about their environmental, social and governance impacts, as well as associated risks and opportunities.
In February 2025, the EU introduced a set of legislative updates known as the ‘Omnibus’ proposals. These aim to streamline the CSRD and its associated European Sustainability Reporting Standards (ESRS), reducing the reporting burden on companies, while keeping the strong emphasis on transparency and accountability.
This article explores the latest updates, the rationale behind key modifys and practical implications for organizations navigating the post-Omnibus CSRD landscape focutilizing on the social disclosures.
What is the new CSRD timeline?
After requesting a quick-tracking approach for the “stop-the-clock” elements of the CSRD simplification – which reduced its scope and postponed its application by two years for waves 2 and 3 (see below) – it is expected that the simplified standards will be adopted by the European Parliament and Council before June 2026.
Once adopted, the Simplified ESRS will replace the existing 2023 ESRS.
Timeline for Implementation (post Omnibus)
| Waves | First CSRD Reporting | Company Category |
|---|---|---|
| 1 | 2025 covering the 2024 financial year |
Entities already subject to the Non-Financial Reporting Directive (NFRD), which includes entities with listed securities on an EU-regulated market and more than 500 employees |
| 2 | 2028 covering the 2027 financial year |
EU companies with >1,000 employees and €450 million turnover. Voluntary SME standard (VSME) for those out of scope |
| 3 | 2029 covering the 2028 financial year |
Small and medium-sized undertakings listed on an EU-regulated exmodify, compact and non-complex credit institutions, and captive insurance undertakings |
| Non EU | 2029 covering the 2028 financial year |
Companies from non-EU member states with >1,000 employees and €450 million turnover |
Key takeaways of the simplified European Sustainability Reporting Standards
According to the European Financial Reporting Advisory Group (EFRAG), the simplification process resulted in a more than 50% reduction in the number of mandatory datapoints through the following levers:
- Simplification of the Double Materiality Assessment (DMA)
- Better readability/conciseness of sustainability statements and better inclusion in corporate reporting as a whole
- Critical modification of the relationship between Minimum Disclosure Requirements (MDRs) and topical specifications. There had been an effort to eliminate overlaps between ESRS1-2 and the topical standards
- Improved understandability, clarity and accessibility of the Standards
- Introduction of other suggested burden-reduction reliefs
- Enhanced interoperability
What does the simplified ESRS mean for Social Disclosures?
The Simplified ESRS introduces substantial modifications to several social disclosure requirements. The most impactful modifys in the S1-Own Workforce Standard are:
The previous S1.2 and S1.3 Disclosures on employee engagement and remedial processes have been merged into a new broader S1.2. The revised nomenclature of disclosures is therefore shifted by one digit from S1.3.
The threshold to report has modifyd from “countries in which the undertaking has 50 or more employees representing at least 10% of its total number of employees.” To “countries in which the undertaking has 50 or more employees and that are the ten largest countries in terms of employee numbers”.
The calculation of turnover is more prescriptive in the revised ESRS: “For the employee turnover calculation, the undertaking shall divide the number of employees who leave voluntarily or due to dismissal, retirement or death in service by the average employee headcount.”
Based on the feedback received in the information gathering, the new S1-6 is simplified significantly to reduce its granularity and scope.
The threshold for reporting is much more flexible: “for each counattempt in which it has significant employment”
The distribution of employees by age group (under 30 years old; 30-50 years old; over 50 years old) has been relocated to a non-mandatory datapoint.
Simpler and clearer approach confirming reliance on collective bargaining or statutory (or estimated) minimum wages:
- In the EU: in accordance with Directive (EU) 2022/2041
- Outside the EU: as confirmed by International Labor Organization (ILO) principles.
Retirement is eliminated from the inventory of social protection programs and Parental leave is modifyd to Maternity leave. So we are left with four programs:
- Sickness
- Unemployment starting from when the employee is working for the undertaking
- Employment injury and acquired disability
- Maternity leave
The disclosure of types of employees not covered is rerelocated; only a list of countries where employees are not all covered is required to disclose.
The optional breakdown by gfinisher and by category of employees for S1.12 is deleted. There is now a mention that data collection for persons with disabilities is restricted to legally permissible cases.
The optional breakdown by gfinisher and by category of employees is rerelocated.
Deletion of the datapoints related to ill-health for non employees and workers in the value chain and reduction of scope of the metric.
The percentage of employees taking family-related leave and the gfinisher breakdown is relocated to a non-mandatory datapoint.
The calculation methodology remains the same, in particular, based on median remuneration for the annual total remuneration ratio and on the unadjusted hourly pay gap calculation. However, the adjusted gfinisher pay gap by employee category and/or broken down by counattempt, which can take into account specific factors that can further explain the differences in pay, may provide additional contextual information that complements the unadjusted gfinisher pay gap calculation.
The adjustment for purchasing power differences is rerelocated.
This disclosure and its relevant Application Requirements have been simplified and streamlined with less granular requirements.
The ESRS S2 – Workers in the Value Chain, ESRS S3 – Affected Communities and ESRS S4 – Consumers and End Users have also been significantly simplified and their application can be postponed for two additional financial years (FY 2025 and FY 2026).
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