EU taxonomy 21 Apr 2023
Who is the EU taxonomy for and what are the benefits of alignment?
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The EU Corporate Sustainability Reporting Directive (CSRD) entered into force in January 2023, representing a significant expansion of mandatory sustainability reporting in the EU.
On 26th of February, the European Commission presented its long-awaited ‘Omnibus’ package, revising three emblematic texts of the Green Deal: the CSRD, the CS3D (Directive on Corporate Due Diligence) and the EU taxonomy. This ‘Omnibus’ aims to respond to the demand for simplification of requirements from many political leaders, decision-makers and companies.
Since the Omnibus proposal is still in draft form, it must go through public consultation and parliamentary approval before becoming legislation. Significant changes could still occur during this process.
While we await clarifications and amendments to the Omnibus before it is formally adopted, we would like to share with you a few key points regarding its implications for your company’s application of the CSRD.
As a crucial pillar of the EU Sustainable Finance Strategy and built around international references such as the TCFD and CDP, the CSRD aims to guide investment flows towards sustainable enterprises to ensure that the goals of the European Green Deal can be achieved:
The Omnibus package published by the European Commission proposes to ‘simplify without deregulating, simplify for better deployment’. Many changes are proposed, but the CSRD does not lose sight of its primary objective: creating a comprehensive, transparent, and uniform reporting basis at the EU level based on environmental, social and governance (ESG) indicators to be communicated by all the organisations concerned and covering governance, strategy, risks and metrics.
Source: based on European Commission’s chart (15.06.2022)
The most significant change of the Omnibus is the increase in eligibility thresholds, reducing the number of companies subject to the obligations by 80%. The updated guidelines would only affect:
These regulatory changes remain critical for multinational companies with significant EU operations or revenue streams. Even if compliance thresholds shift, aligning with CSRD can provide a competitive edge in securing investment and strengthening relationships with EU-based stakeholders. Additionally, emerging sustainability disclosure frameworks in jurisdictions such as the UK (UK Sustainability Disclosure Standards), Canada (ISSB-aligned Canadian Sustainability Disclosure Standards), and other global markets signal a broader trend toward mandatory corporate sustainability reporting. Companies operating across multiple regions should prepare for increasing alignment between these regulatory frameworks, ensuring consistency and transparency in their sustainability disclosures.
Other companies falling outside the criteria and SMEs will be able to use the ESRS (The European Sustainability Reporting Standards) and adopt the VSME (Voluntary reporting standard for SMEs) on a voluntary basis to pursue their commitment to the environmental transition.
| The other key changes proposed by the Omnibus for the CSRD are as follows: Issue at stake | Previous requirement (February 2024) | Proposed change in the Omnibus proposal (February 2025) |
| Number of companies impacted (estimations) | > 50,000 | 10,000 (new thresholds will probably reduce concerned companies by 80%) |
| Reporting deadline Wave 1 | 2025 for listed companies with more than 500 employees | Maintained |
| Reporting deadlines Wave 2 and Wave 3 | 2026 for large companies2027 for listed SMEs | Postponing by 2 years for large companies that have not yet started implementing CSRD (2028) + other non-listed large companies (2029) |
| Value chain reporting | Required to obtain data from all suppliers identified in the double materiality assessment + ESRS LSME as the value chain cap (maximum amount of sustainability information that value chain SMEs have to provide for reporting purposes) | Value-chain cap applied to all companies with <1000 employees, to provide limited number of information to be provided to companies falling under CSRD (based on the Voluntary SME developed by the Commission) |
| Assurance | Limited assurance required | Reasonable assurance requirement removed + assurance guidelines to be published by the EC |
ESRS is the ESG quantitative and qualitative indicators to report under CSRD. These reporting standards can be divided into three blocks:
With the Omnibus, the European Commission is committed to reducing the number of indicators and clarifying the methodology in a delegated act specific to ESRS developments. Sectoral standards, although expected, would be abolished so as not to increase the number of data points to be communicated.
Despite these changes, and because of its holistic approach, the CSRD remains the most robust reporting framework among the other developments in international standards (GRI, ISSB, etc.).
CSRD reporting must be conducted annually. In 2025, companies falling under Wave 1 (large listed companies) will publish their first reports covering 2024 data.
With Omnibus I, the reporting requirements for companies with more than 1,000 employees is expected to be postponed by two years.
In addition, the European Commission has planned two further Omnibus packages with a potential impact on the application timetable:
Omnibus II – Focused on simplifying reporting processes to encourage strategic investment and efficiency.
Omnibus III – Expected to clarify specific reporting requirements for mid-sized companies.
We will continue to monitor developments and provide updates on how these changes may affect your reporting obligations.
Non-financial information must be published in companies’ management report: either in a single consolidated section, in four separate parts (general information, Environmental, Social, and Governance sections) or incorporation by reference (ex. ESRS E1-6, paragraph 41).
Moreover, reported data will be digitalised on an EU public platform, the European Single Access Point (ESAP), through “tagging” (based on the incorporation by reference). The European Single Electronic Format will facilitate accessibility, analysis and comparability of annual reports.
The CSRD should be seen as an opportunity and an invitation to optimism, encouraging managers and their teams to engage in the environmental transition. We encourage every company to anticipate and prepare for the transformations needed in a context of climate and environmental crisis, rather than postponing risks analysis and suffering the consequences, including economic damage.
Our teams can help you make the most of the CSRD and adapt to changes in the Omnibus in 4 stages:
1) Raising awareness and training to get a good understanding of regulatory issues raised by CSRD and engaging teams;
2) Double materiality analysis and alignment of your climate and biodiversity strategy with the requirements of the CSRD, thanks to our 19 years of experience in climate change consulting, from emissions measurement to risk analysis, reporting and carbon offsetting;
3) Drawing up and implementing an ESG roadmap
4) Helping you transform your business model to respect the planetary boundaries.
At EcoAct, we see CSRD not just as a reporting requirement, but as a strategic tool for measuring the robustness of your business model in the face of environmental and societal upheaval. With this in mind, our entire range of services is structured around the implementation of a global strategy to reduce your risks and impact on the planet.
This factsheet covers everything you need to know about aligning to the EU Taxonomy:
Choose EcoAct for industry-leading expertise in climate strategy and sustainability solutions. We’re here to guide your business through every step towards achieving your sustainability goals while supporting your operational success and market reputation.