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 changes and practical implications for organizations navigating the post-Omnibus CSRD landscape focusing on the social disclosures.
After requesting a fast-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.
| 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 exchange, small 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 |
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:
The Simplified ESRS introduces substantial modifications to several social disclosure requirements. The most impactful changes 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 changed 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 country 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 moved to a non-mandatory datapoint.
Simpler and clearer approach confirming reliance on collective bargaining or statutory (or estimated) minimum wages:
Retirement is eliminated from the inventory of social protection programs and Parental leave is changed to Maternity leave. So we are left with four programs:
The disclosure of types of employees not covered is removed; only a list of countries where employees are not all covered is required to disclose.
The optional breakdown by gender 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 gender and by category of employees is removed.
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 gender breakdown is moved 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 gender pay gap by employee category and/or broken down by country, which can take into account specific factors that can further explain the differences in pay, may provide additional contextual information that complements the unadjusted gender pay gap calculation.
The adjustment for purchasing power differences is removed.
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).
The 2025 CSRD update marks a significant step toward more streamlined and focused sustainability reporting in Europe. Companies that are already reporting under CSRD should continue with the current ESRS (2023 version) until the revised standards are formally adopted in the latter part of 2026. However, they should probably start leveraging the proposed simplifications to enhance reporting efficiency while maintaining compliance.
The counterpart of the upcoming simplification will be a greater scrutiny by stakeholders on the justifications for the Disclosures, in particular those including inventories and metrics, such as S1.9 (Adequate Wages), S1.10 (Social Protection), S1.14 (Work-Life Balance Metrics) and S1.15 (Remuneration Metrics). In other words, less narrative but more data-backed assertions. Keeping audit trails will be important.
As the regulatory landscape continues to evolve, staying informed and agile will be key to successful sustainability disclosures in 2026 and beyond. We can help you navigate the current (still applicable for 2026 reporting) and simplified versions of CSRD and provide the necessary audit trails for some of the more challenging disclosures.
For more details of the updates EFRAG has created an interactive hub to allow users of CSRD easy access to information and cross-references.
If you'd like to discuss your individual requirements and next steps please get in touch using the form on the right, or below on a mobile device.
