EU Sustainability Reporting Updates – July 2025

July was a significant month for European sustainability reporting, highlighted by the European Financial Reporting Advisory Group (EFRAG) releasing the long-awaited simplified European Sustainability Reporting Standards (ESRS) Exposure Draft on July 31. The EU Commission also adopted changes to the EU Taxonomy earlier in the month, alongside ‘quick-fix’ relief measures for the first wave of companies subject to the Corporate Sustainability Reporting Directive (CSRD). Beyond these, a “Call for Evidence” launched on July 22 sought input on potential simplifications of EU environmental regulations (the Environmental Omnibus), and EFRAG published its 2025 State of Play report and dashboard for Wave 1 ESRS reporting. The EU Commission officially adopted recommendations regarding the Voluntary Reporting Standards for SMEs (VSME) on July 30. Despite this progress, the final scope of the CSRD remains under negotiation and is expected to be clarified in the coming months.

CSRD Reporting Scope Updates and Ongoing Negotiations

Uncertainty remains concerning the scope of the Corporate Sustainability Reporting Directive (CSRD) and the number of companies it will affect. The initial Omnibus proposal in February 2025 introduced a significant reduction in scope, applying the requirements to companies with over 1000 employees, over €50 million in net turnover, or over €25 million on the balance sheet. The proposed amendment would reduce the number of companies required to report by approximately 80%, from over 45,000 to around 9,000.

Since then, further thresholds have been proposed. In mid-June, the European Parliament´s Omnibus negotiator proposed a significant increase in the employee and turnover thresholds, and a week later, the Council of the EU announced its position.