After the “Stop-the-clock” directive that delayed by two years the CSRD application for wave 2 and 3 companies back in April this year, the European Parliament adopted its negotiating position on the Omnibus I Directive on 13 November 2025, which raises thresholds for CSRD and CSDDD, and removes mandatory climate transition plans, EU-wide civil liability and the turnover-based fines. Now that Trilogue negotiations are imminent, the revised directives are anticipated by the end of 2025. The applicability and actual impact on companies will come into effect only once transposed by each EU member state into national legislation.
What changed with Omnibus I
- Higher thresholds for mandatory reporting - fewer companies will be required to report under CSRD and CSDDD, and there will be less information available for their stakeholders;
- Lower depth of sustainability information and simplified standards—the availability of ESG data is going to be negatively impacted. This could make it more challenging for investors to thoroughly screen and assess sustainability risks and opportunities; and
- Removing mandatory climate transition plans might bring immediate relief, but on the other hand leaves companies exposed to unaddressed physical and transitional climate risks in the medium and long term, while investors and stakeholders continue to expect robust climate information.
The EU Taxonomy framework is also being updated, adding more regulatory uncertainty for companies preparing 2025 reports. With extended scrutiny and optional deferral, businesses can choose the most suitable reporting framework for the next cycle. If approved, the changes should reduce administrative burden, and firms that monitor EU developments and prepare early will be best placed to adapt smoothly.
Why you should consider VSME standard
The Voluntary Sustainability Reporting Standard for SMEs (VSME) is the optional reporting standard recommended by the EU for SMEs, designed to be much simpler than the initial European Sustainability Reporting Standards (ESRS) with about 150 datapoints compared to over 1,000.
This new standard is designed for small, medium, and larger organisations - Wave 1 and Wave 2 companies under the old thresholds. The VSME standard is less demanding than ESRS, offering proportionate disclosures tailored to an entity’s size, while supporting the companies to maintain coherent reporting within a framework. Businesses can choose between the basic or comprehensive module, depending on their maturity and the actual level of data required by stakeholders.
By adopting VSME, companies of varying sizes can demonstrate responsible business practices, future-proof their operations, and address growing stakeholder expectations for transparency and accountability. Ultimately, companies must satisfy the expectations of their stakeholders, particularly as 76% of them rely on reported sustainability information to build trust in the companies they are entering business relationships with.[1]
How to move forward—practical steps
- Assess readiness: Benchmark your current practices and your peers against given frameworks like VSME.
- Define your material topics: Use peer benchmarking supplemented by AI-driven analysis to prioritise issues that matter most to your stakeholders.
- Leverage technology: ESG platforms and AI tools streamline data collection, validation, and reporting, reducing manual effort, improving accuracy and efficiency.
- Start small, scale gradually: Begin with essential metrics (energy use, workforce diversity) and expand as capabilities mature.
- Train your teams: Accurate data depends on strong engagement across functions.
- Publish voluntarily to demonstrate commitment and accountability. Consider limited assurance on some indicators to strengthen credibility and reduce greenwashing risk.
AI + ESG = Competitive advantage
We already see organisations are leveraging AI in practical ways to elevate their ESG reporting. These use cases can be implemented independently as your organisation matures:
- Automated risk assessment: review of report details and draft initial risk assessment documentation, reducing manual effort and improving accuracy;
- Data quality control: analyse Greenhouse Gas (GHG) emissions data, flagging anomalies and ensuring data integrity. Running past sustainability reports through GenAI tools helps identify potential inconsistencies, supporting continuous improvement and audit readiness;
- Streamlined disclosure development: end-to-end disclosure process—from gap analysis to narrative drafting—can be accelerated and standardised using AI-driven solutions; and
- Stakeholder insights: anticipate stakeholder reactions to sustainability disclosures, to tailor communications and address concerns proactively, especially in a due diligence or transactional context.
These capabilities make ESG reporting faster, more reliable, and cost-effective, contributing further towards your competitive edge.
Regulatory timelines may shift, but ESG reporting remains essential to demonstrate resilience, transparency, and long-term value. You should continue at your own pace—powered by AI, focused on what really matters and with proportionate standards like VSME.
[1] PwC Global Investor Survey, 2024
76% investors say they put more trust in sustainability information reported by the companies they invest in or cover if it has been assured
