Sustainability in Europe: Taxonomy and CSRD
The EU Taxonomy and the Corporate Sustainability Reporting Directive (CSRD) are pivotal frameworks driving sustainable transformation across industries.
EU Taxonomy
A framework focused on classifying economic activities of a corporate to determine their environmental sustainability, enabling businesses and investors to align with the EU's green objectives and report their impacts with transparency.
The framework's key objectives are to:
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Ensure data transparency and comparability,
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Encourage sustainable investment by obtaining more attractive interest rates from banks,
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Facilitate the EU’s transition towards climate neutrality goals.
Corporate Sustainability Reporting Directive (CSRD)
The CSRD is a European directive designed to improve transparency and accountability in corporate sustainability practices. It establishes clear and uniform guidelines for companies to disclose their environmental, social, and governance (ESG) impacts, risks, and strategies.
Built on the Non-Financial Reporting Directive (NFRD), the CSRD significantly expands its scope by covering a wider range of corporations, by implementing comprehensive reporting standards aligned with the EU's Green Deal, as well as by requiring external verification of sustainability disclosures.
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The directive’s key objectives are to:
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Encourage companies to embed sustainability into their strategic decision-making,
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Provide stakeholders (including investors, consumers, and regulators) with consistent and reliable sustainability data,
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Facilitate the EU's transition to a sustainable, resilient and inclusive economy.
Omnibus proposals
The Omnibus Packages presented by the European Commission on 26 February 2025 aim to establish a unified sustainability reporting framework and streamline overlapping EU reporting and due diligence requirements.
Omnibus key elements
Timeline overview
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Wave 1: No changes – companies must publish their sustainability reports in 2025 as initially planned.
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Wave 2: Reporting deadlines depend on company size:
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More than 1,000 employees: Deadline postponed to 2028 (instead of 2026).
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Fewer than 1,000 employees: Reporting is voluntary.
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Wave 3: Applies to listed SMEs, small and non-complex credit institutions, and captive (re)insurance undertakings – reporting deadline postponed to 2029 (instead of 2027).
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​Fewer than 1,000 employees: Reporting is voluntary.
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Wave 4: No changes – reports still due in 2029.
Specific updates on the CSRD
In addition to the two-year delay, the following key changes are being discussed:
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Reduced complexity and volume of required disclosures.
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Greater emphasis on quantitative data points rather than narrative reporting.
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Removal of the obligation to move from limited assurance to reasonable assurance.
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No changes regarding the Double Materiality Assessment.
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Sector-specific standards will be discontinued.
What’s next ?
Following the release on 26 February, the legislative process for the Omnibus Package is expected to take 3 to 4 months, assuming the proposal gains sufficient support from the Council of the EU and the European Parliament.
Once approved by both co-legislators and published in the Official Journal of the EU, Member States will have a fast-track transposition period to incorporate the measures into their national legislation.
The European Commission aims to adopt the revised European Sustainability Reporting Standards (ESRS) within six months following publication in the Official Journal.