At present, the ESRS Delegated Act (which entered into force in December 2023) includes 161 data points that are mandatory irrespective of the materiality assessment, a further 622 data points that are subject to the materiality assessment, additional data points which are to be reported in certain circumstances, and 269 voluntary data points marked as ‘may disclose’.1
According to EFRAG the revision of the ESRS needs to substantially reduce the number of mandatory ESRS datapoints by:
(i) Removing those deemed least important for general purpose sustainability reporting.
(ii) Prioritizing quantitative datapoints over narrative text.
(iii) Further distinguishing between mandatory and voluntary datapoints.
Without undermining interoperability with global reporting standards and without prejudice to the materiality assessment of each undertaking.
The revision should also clarify provisions that are deemed unclear and improve consistency with other pieces of EU legislation. It should provide clearer instructions on how to apply the materiality principle, to ensure that undertakings only report material information and to reduce the risk that assurance service providers inadvertently encourage undertakings to report information that is not necessary or dedicate excessive resources to the materiality assessment process.
The revision should in addition simplify the structure and presentation of the standards, further enhance the degree of interoperability with global sustainability reporting standards, and contain further modifications considered necessary considering the experience of the first application of the ESRS. EFRAG launched a public call for input on ESRS Set 1 Revision to gather input from all relevant stakeholders in relation to potential revisions, but mainly to receive important feedback from 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 organizing with preparers, auditors and users.
5. Formal complaint by NGOs with the European Ombudsman on the EU ‘Omnibus I’ package
On April 18, 2025, a coalition of eight NGOs, including ClientEarth and Friends of the Earth Europe, announced that they submitted a formal complaint with the European Ombudsman. The NGOs claim that the ‘Omnibus I’ package was developed in an undemocratic, untransparent and rushed way, and that the process was ‘deeply flawed’. According to these NGOs, the process enabled a small group of industry interests to ‘take control’ and push for the deregulation of key sustainability laws, and failed, inter alia, to assess whether the package as proposed, aligns with the EU’s climate neutrality target.
The NGOs warn that the ‘Omnibus I’ package could undermine the EU’s economic stability and the competitiveness objectives, arguing that strong sustainability laws are in fact key to the EU’s competitive advantage in a global market where consumers and investors increasingly demand responsible corporate action. The outcome of a formal complaint to the EU Ombudsman can range from informal resolution and recommendations for change, to public reports and increased scrutiny. The EU Ombudsman cannot impose penalties, annul decisions, or provide compensation. Their role is to investigate, recommend, and encourage good administration.
6. Transposition of the STC Directive in selected EU Member States
An EU-wide level playing field on CSRD continues to remain elusive because some EU Member States have not even implemented the CSRD yet. It will be interesting to see whether the Member States which did not yet implement CSRD, will approach the transposition in two stages, i.e. first, transpose the CSRD as amended by the STC by December 31, 2025, and second, transpose the substantive amending directive at a later stage. Another option for these Member States may be to transpose the CSRD, the STC Directive and the directive with substantive changes in one stage, i.e. hold off transposition until after the substantive changes are finalized. Below we shed some light on the transposition approach for the STC Directive in a number of Member States.
Netherlands
The Netherlands has not yet transposed the CSRD, and the Dutch government prefers to include both the implementation of the STC Directive and the Substantive Proposal in the implementation process for the CSRD, provided that the negotiations on the Substantive Proposal make sufficient progress.
The approach envisaged by the Dutch government, leaves wave 1 entities in the Netherlands with uncertainty, noting that almost all of these wave 1 entities have voluntarily published a sustainability report on financial year 2024, based on the current CSRD and ESRS, as well as the draft Dutch implementation legislation. The AFM, the envisaged Dutch regulator for CSRD, states that it is reviewing the sustainability reports of those entities, but that the results of its studies will not lead to enforcement measures, “except in the event of blatant violations”.
Germany
Germany has not yet transposed the CSRD, primarily due to the recent elections. In its coalition agreement, the newly formed government has expressed its intention to avoid excessive regulation, particularly in the areas of sustainability reporting (CSRD) and supply chain due diligence (CS3D). The government has also indicated its support for the Substantive Proposal and its commitment to advocating for solutions that minimize bureaucracy, especially for small and medium-sized enterprises. It remains unclear when the transposing legislation for the CSRD and the STC Directive will enter into force. Based on the statements in the coalition agreement, it appears possible that the new government may delay passing the transposing law until after the Substantive Proposal is adopted. More generally, the position of the German government is currently not clear on May 9, 2025, German Chancellor Merz said in a press conference that Germany will revoke the national supply chain law in Germany and that he also expects the EU to follow suit and cancel the CS3D. The German Minister of Finance and Vice Chancellor, on the other hand, stated publicly that he is in favor of retaining a streamlined supply chain due diligence act but that he is not supporting an entire abolishment of such rules.
France
The French legislation to (pre-emptively) transpose the STC Directive was adopted by the French Parliament at the beginning of April 2025 as part of a bill with other legislation. After publication on May 2, 2025 the transposition process of the STC Directive in France is now complete.
Italy
Italy has been swift in adopting the CSRD and we expect that the Italian Government will also want to amend the Italian CSRD implementing legislation to align with the STC Directive as soon as possible. While a proposal to that end is anticipated, CONSOB, the Italian financial markets regulator and responsible for CSRD supervision in respect of issuers of securities admitted to trading on regulated markets, has updated its Issuers’ Regulation, somewhat watering down the scope of its own supervisory efforts and certain reporting requirements (no longer requiring companies to report “significant issues” that emerged during the sustainability reporting process on the compliance attestation form).
7. ECB issued an own initiative opinion on the EU ‘Omnibus I’ package
On May 8, 2025 the European Central Bank (ECB) delivered an own initiative opinion on the EU ‘Omnibus I’ package. In its opinion the ECB explains the relevance of the proposed changes to the CSRD and the CS3D for the objectives and tasks of the ECB and the Eurosystem. The ECB emphasizes the importance of striking the right balance to ensure that the benefits of sustainability reporting for the European economy and the financial system are retained while ensuring that the framework is proportionate. The ECB considers a well-calibrated sustainability reporting framework essential for market participants to understand and price sustainability-related financial risks, while at the same time such a framework is essential to address data gaps in sustainability policy, risk assessment and risk monitoring frameworks for the financial sector.
The ECB provides specific comments and suggestions on some of the proposed changes in the Substantive Proposal, for example on the scope of the CSRD reporting obligations and on the CS3D climate transition plans. According to the ECB, the proposed amendments to the scope, for example, could significantly limit stakeholders’ access to important information and potentially lead to unwanted outcomes, such as certain significant emitters potentially falling outside the scope of the reporting obligation.
Specific drafting proposals by the ECB are set out in a separate technical working document. The ECB also urges the EU legislators to reach an agreement on the Substantive Proposal as soon as possible and by the end of 2025 at the latest.
8. Potential quick fix for phase-in of disclosure requirements for wave 1 entities
During a public hearing in the legal affairs committee of the European Parliament on May 13, 2025, Tom Dodd, Team Leader Sustainability Reporting at the Commission, announced that the Commission expects to soon adopt a ‘quick fix’ delegated act, which will arrange that wave 1 entities will not have to report additional information on FY 2025 compared to FY 2024, basically providing relief on the ESRS phase-in requirements. This would mean that wave 1 entities can use the phase-in provisions for FY 2024 also for FY 2025 and beyond.
Conclusion
The EU’s sustainability reporting and due diligence landscape is in flux and entities should monitor developments closely, particularly as the Substantive Proposal and ESRS revisions progress, and as Member States clarify their national transposition strategies.
Find out more
For further information on the ‘Omnibus I’ and CRSD and CS3D, please read: EU Omnibus and the CSRD – Ten burning questions on the Commission’s proposals and CS3D – Ten question on the Omnibus – A&O Shearman. For context, please read: EU simplification revolution and the Omnibus or listen to this podcast (in Italian): Simplifying sustainability: the European Commission’s Omnibus package - A&O Shearman.
Footnote
1. Source: EFRAG.