CSRD Omnibus Simplification in 2025: What Changes for Multinationals on Scope, Timing, and Materiality
- Gasilov Group Editorial Team
- Oct 31
- 8 min read
The European Commission’s February 2025 simplification package, followed by the European Parliament’s April vote to “stop the clock” on several deadlines, has reset the near-term playbook for Corporate Sustainability Reporting Directive (CSRD) programs. The combined effect: fewer companies in scope, delayed application dates, and a substantial reduction in datapoints once the amended European Sustainability Reporting Standards (ESRS) are finalized.
While this sounds like relief, it’s not a reason to slow down. The smartest multinationals are treating this pause as a build season—using it to strengthen process design, evidence trails, and audit readiness. Those that treat simplification as a window to upgrade quality, rather than defer effort, will emerge stronger with investors, lenders, and customers.
What Actually Changes: Scope, Timing, and Rules of Engagement
Scope Tightens
The Omnibus proposal narrows mandatory reporting to companies with more than 1,000 employees and either €50 million in turnover or €25 million in total assets. Non-EU groups face higher EU turnover thresholds. The Commission also plans a voluntary standard for companies below the threshold and a reinforced value chain “cap” to prevent large reporters from over-asking suppliers.
This means fewer small and mid-size entities will fall automatically in scope, but large multinationals must still consider complex group structures. Holdings and mixed EU/non-EU footprints can create grey areas that need careful documentation.
Key takeaway: Simplification may narrow the field, but for large groups, scoping is still an analytical exercise that requires alignment between sustainability, finance, and legal functions.
Timing Shifts
The “stop the clock” directive, published in the Official Journal in April 2025, defers application for companies that had not yet started CSRD reporting. This typically pushes many first-time reporters to financial year 2027, with publication in 2028. Treat it as a reset of your critical path—not a suspension of readiness work.
Simplified Standards
EFRAG’s July 2025 exposure drafts propose a roughly 57 percent reduction in datapoints while keeping core objectives intact. Sector-specific standards are postponed, and limited assurance remains the baseline. The tradeoff favors depth over breadth, placing greater emphasis on robust materiality judgments and documented scoping logic.
Scope: Who Remains In, and How to Prove It
Scoping now hinges on people and size—not on qualitative factors. Simple in theory, complex in execution. Multinationals must reassess at the legal-entity level, then consolidate results into a group-wide view.
For groups that may fall out of scope, it’s best practice to prepare a concise memo documenting the rationale, citing the Omnibus thresholds. Meanwhile, large reporters should adopt a streamlined supplier request set aligned with the upcoming voluntary SME standard, ensuring suppliers—both in and outside the EU—receive early notice of the new expectations.
Internal misalignment is a common pitfall. Legal, finance, and sustainability often use inconsistent datasets. To prevent disputes, create a single source of truth for employee counts and turnover, verified by finance controllers.
Practical move: A one-page dashboard linking headcount and turnover per entity to the applicable rule can resolve most internal scope debates.
Timing: A Two-Year Window to Build Capability
The deferral is a genuine reprieve, but markets are watching how firms use it. The best programs are already using 2025–2026 to mature their CSRD infrastructure. A pragmatic sequencing approach looks like this:
Clean your ESRS 2 backbone. Focus on governance, strategy, business model, and Impact-Risk-Opportunity (IRO) mapping. Everything else flows from there.
Lock your data dictionary. Define every metric, source system, owner, and control. Treat it as a living document that audit and sustainability teams can co-own.
Pilot limited assurance early. Test a handful of metrics in 2026—even if not required—to identify control gaps before your first full reporting cycle.
Key insight: Each of these steps cuts future assurance risk and accelerates sign-off when limited assurance becomes mandatory.
Many firms now host short cross-functional workshops to validate scope assumptions and align on 2026 build plans. A two-hour session with finance and sustainability leads can often resolve half the uncertainties that delay execution.
Materiality Documentation: What Supervisors and Auditors Expect
The European Securities and Markets Authority (ESMA) reviewed 91 issuers in its 2025 fact-finding study. About 60 percent met the objective of IRO 1 disclosures on process, yet many relied on boilerplate text. Two issuers received qualified opinions, and auditors cited materiality documentation weaknesses as a recurring issue.
ESMA’s guidance is clear:
Avoid generic templates.
Disclose quantitative thresholds.
Show how gross impacts were assessed.
Map IROs to ESRS AR 16.
Connect material topics to policies, actions, targets, and metrics.
What Good Looks Like: Lessons from 2024 Reports
Several leading EU reporters already illustrate strong materiality practice.
Volkswagen Group applied ESRS-aligned double materiality for fiscal 2024, identifying 28 of 38 topics as material. The company used a harmonized methodology across subsidiaries, updated annually, producing a transparent topic list and a clear basis for excluding immaterial datapoints. This structured approach will pay dividends during assurance.
Adidas disclosed explicit materiality thresholds—three on a five-point scale for both impact and financial relevance—and identified climate impacts concentrated in the upstream supply chain. The clarity of threshold logic and its connection to topic-level disclosures directly addresses ESMA’s warning against boilerplate language.
BASF enhanced its 2024 double materiality assessment with granular documentation, concluding that ESRS S4 (“Consumers and End Users”) was not material given its B2B focus, while linking community impacts to financial risk under S3. The decision is both defensible and auditable, demonstrating integration between materiality and risk management.
Simplification reduces volume, not scrutiny.
The takeaway from these examples is straightforward: a leaner framework still demands deeper evidence. The firms investing in governance and documentation now will be audit-ready when ESRS simplification turns into enforcement.
From Simplification to Strength: Staying Ahead of Investor Expectations
The simplification package may trim reporting volume, but it does not lower expectations from investors or auditors. Materiality processes that lack traceable thresholds or stakeholder rationale will continue to attract questions during assurance.
Firms that use 2025 and 2026 to harden governance, clarify scoping, and turn materiality from a one-off workshop into a repeatable control function will be ready when the clock restarts.
Using the Two-Year Window to Lock in Quality and Reduce Audit Risk
The EU’s “stop the clock” adjustment gives companies until 2027 for their first CSRD reporting year. The most strategic use of this period is to consolidate controls, document scoping, and build an auditable trail. Simplification does not remove risk; it redistributes it from volume to credibility.
The Scope 3 Challenge Under a Lighter Regime
The Omnibus framework includes a value chain shield limiting how much large reporters can request from smaller suppliers. This reduces friction but does not eliminate the requirement for credible Scope 3 estimation where the topic is material.
A practical approach:
Map spend categories to emissions hotspots. Prioritize sectors that dominate impact and influence.
Segment suppliers. Push for primary data from those with high spend or leverage, and apply conservative estimation for others.
Use a method hierarchy. Prefer activity-based data where possible, supplier-specific factors where available, and reliable secondary databases as a fallback.
Document your logic. Keep an annual review loop that ties method adjustments to assurance findings.
Key takeaway: Simplification offers breathing room to standardize supplier data collection—not to ignore it.
The European Commission notes that this shield aims to reduce unnecessary burden on small and medium-sized enterprises while focusing rules on the largest entities (European Commission Omnibus package, 2025).
Assurance and Controls: What Limited Assurance Really Means
Limited assurance remains the default requirement under the Omnibus proposal, but the expectations are far from minimal. ESMA’s October 2025 review of 91 issuers found two qualified opinions and several “emphasis of matter” notes—mostly tied to thin materiality evidence and incomplete datapoint mapping (ESMA Materiality Fact Finding, 2025).
To reduce audit risk, teams should focus on three foundational artifacts:
A scoping memo citing the Omnibus thresholds and explaining entity inclusion or exemption decisions.
An IRO workbook documenting thresholds, stakeholder inputs, and changes, version-controlled and approved by the audit committee.
A disclosure register tracing each ESRS datapoint to a source, owner, and explanation for omissions.
These documents shorten audit cycles by providing clear evidence that controls exist and operate effectively.
Multi-Regime Alignment: Why Simplification Is Not a Global Pause
For multinationals, EU simplification does not mean global slowdown.
United States: The Securities and Exchange Commission (SEC) voted in March 2025 to stop defending its federal climate disclosure rule. While this reduces immediate federal pressure, investors and ESG ratings firms still expect climate data (SEC Press Release 2025-58).
California: The California Air Resources Board is drafting rules under SB 253 and SB 261, targeting climate risk reporting and Scope 1–2 emissions disclosure by mid-2026 (Mayer Brown, October 2025; White & Case, 2025).
Strategic implication: Use the EU deferral to harmonize data models that can flex across EU, California, and investor-driven reporting frameworks.
Real-World Reference Points
Public examples offer a benchmark for what credible documentation looks like:
Volkswagen Group (Germany) used a four-step double materiality process, declaring 28 of 38 topics material. The firm documented a clear exclusion basis for the rest and linked governance oversight to the results (Volkswagen Annual Report 2024).
Adidas (Germany) set a defined threshold of three on a five-point scale for both impact and financial materiality, showing that its most significant climate impacts occur upstream (Adidas Sustainability Statement 2024).
BASF (Germany) concluded that ESRS S4 “Consumers and End Users” was not material for its B2B model and instead emphasized community-related financial effects under S3 (BASF Report 2024).
Each of these examples illustrates how transparent threshold logic and linkage to governance convert qualitative judgments into auditable evidence.
Three practical priorities:
Refresh scope assessment with a one-page memo citing the Commission thresholds (European Commission Omnibus page).
Re-run double materiality with explicit thresholds and rationale. ESMA’s 2025 review shows that top reporters disclosed quantitative methods.
Build a disclosure register that maps every ESRS datapoint to a system owner, data source, and control. Pilot limited assurance in the next cycle to identify process gaps.
The goal is not to do less reporting—it’s to make every datapoint defensible.
Firms that embed the disclosure register as a daily operating tool rather than a year-end checklist often see shorter audit cycles and higher internal confidence.
Get In Touch
The 2025 simplification is not an exemption; it’s a restructuring. Use the extra time to pressure test scope assumptions, clarify double materiality thresholds, and establish an auditable disclosure register that meets both EU and U.S. expectations.
If you want tailored support, contact us to validate your scope memo, refresh your materiality framework, and design a data governance model that can withstand both assurance and investor scrutiny.
Written by: Gasilov Group Editorial Team
Reviewed by: Rafael Rzayev, Partner – ESG Policy & Economic Sustainability
Frequently Asked Questions (FAQ): Executives’ Top Questions on the 2025 CSRD Omnibus
1. What is the earliest realistic year a newly in-scope multinational will publish a CSRD report after the Omnibus changes?
Under the European Parliament’s April 2025 vote, most second- and third-wave companies will publish their first CSRD statements for financial year 2027, released in 2028. Confirm your wave classification before finalizing project plans (European Parliament press release).
2. Does the reduced datapoint set change how companies should approach double materiality?
Yes. EFRAG’s July 2025 exposure drafts cut datapoints by approximately 57 percent, but they also increase the focus on defensible thresholds and fair presentation. Strong topic-level IRO mapping and transparent threshold documentation are now essential (EFRAG Amended ESRS).
3. How much supplier data is still required if the value chain shield limits requests?
Large companies must still gather enough primary data to substantiate material topics. The shield’s purpose is to right-size requests, not eliminate them. Combine targeted supplier engagement with conservative estimation for residuals (European Commission Omnibus overview).
4. Will auditors demand reasonable assurance in the next reporting cycle?
No. Limited assurance remains the baseline. However, ESMA’s 2025 review showed that even limited assurance can lead to qualified opinions when evidence is weak. Strengthening documentation now will prevent escalation later (ESMA 2025 Fact Finding).
5. How should EU reporting programs connect with U.S. and California rules?
Plan for alignment, not duplication. The SEC rule’s litigation pause means fewer federal mandates in the short term, while California’s SB 253 and 261 advance regional requirements for emissions and risk disclosure. Harmonize data architecture to accommodate both EU and U.S. frameworks (SEC release; Mayer Brown California update).
