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If you opened LinkedIn, you would have seen most of your newsfeed dominated by the Omnibus announcement on the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy, and the Carbon Border Adjustment Mechanism (CBAM). You would have seen speculations, many graphs, and hundreds of opinions on what it means for everyone.
During a crisis, information becomes hard to trust, and the number of contradicting voices inevitably rises. Here is my perspective as a policy expert and part (at the negotiation table) of the conversation of policies like CSRD for multiple years. It might feel different from what you've read so far.
This is what you need to know on the next steps on CSRD
CSRD is a convoluted beast—there is no doubt about that. The European Commission published an Omnibus—a fancy term for a proposal to change multiple policies simultaneously. Now, we are in the next stage of voting. Two bodies—the European Parliament and the Council of the European Union (EU)—have to approve the legislation.
Credit: EU Parliament.
The European Parliament holds the key
This leaves the European Parliament as the major decision maker at the moment that is likely to decide the Omnibus outcome. From the upcoming evidence and public comments we have seen to date, we are under the impression that the Council broadly agrees with the Omnibus proposals and would support them. The volume of noise and comments generated by this step in the legislative process might leave the impression that the changes are adopted and inevitable. That is not so.
Until the vote is formally cast (not for months), there is no way to know what the final directive will hold. In the meantime, countries that have transcribed the law are subject to it, and Omnibus is in no way suspending current CSRD requirements, which are still valid. In reality, there could also be several ‘votes’ if the EU Parliament does not accept the Omnibus proposal as is - until there are cons.
Understanding the political split in the EU Parliament
The composition of the EU Parliament is critical. Currently, the parties on the right-hand side of Figure 1 are (broadly) supportive of the Omnibus (EPP, ECR), and others want even further cuts and delays. On the other hand, the left-hand side believes the Omnibus is effectively de-regulated instead of simplified (S&D, Greens).
For the Omnibus to pass, a simple majority (361 MEPs) must vote for or against the proposals. There is no legislative time limit for the vote to be put in Parliament. There does not seem to be a particular consensus; therefore, we will likely see months of negotiations on the total package.
What could change quickly?
The only element of the proposal likely to be fast-tracked is the ‘stop the clock’ element, which advocates a reporting delay. This vote could happen as early as April 1st.
This would likely mean implementation on a pan-European level before summer. This would effectively delay reporting deadlines for most companies (including those already integrated CSRD in national legislatures). At the same time, the EU parliamentarians debate the rest of the proposals.
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