ESG in motion: What's coming and how to prepare?

ESG reporting brings companies new challenges as well as opportunities. Large enterprises already have to disclose detailed information on sustainability, while further companies were soon meant to join them. The aim is to increase transparency, yet at the same time concern about the administrative burden is growing. The European Commission has therefore prepared Omnibus packages that should simplify the regulations. What changes were presented on 26 February 2025, how to effectively prepare for them and what can companies expect?

Last year, the CSRD directive (Corporate Sustainability Reporting Directive) was transposed into the Accounting Act, fundamentally changing the rules for non-financial reporting. Companies are required to disclose more detailed information on sustainability, and the size criteria for the obligation to report ESG data are also changing.

From 1 January of this year, the obligation for businesses to report sustainability data according to size criteria was meant to be gradually phased in. On Wednesday 26 February 2025, however, the European Commission published the first two Omnibus packages, which aim to simplify the legislation on sustainability. The changes contained in the packages are still only proposals, since they still have to be approved in the European Parliament and the Council of the EU, but it is very likely that the implementation of some rules will be postponed by at least a year and we can also expect other technical changes. So let us take a look at what we know.

The advantages and challenges of ESG reporting

The aim of ESG reporting is to increase the transparency and social responsibility of companies. This information is important for investors, financial institutions, employees and the public. The implementation of ESG management can bring companies:

• identification and mitigation of risks,
• readiness for future regulatory requirements,
• reduction of operational risks,
• increased competitiveness on the global market,
• strengthening of reputation and the trust of investors and customers.

On the other hand, the systematic monitoring of ESG factors represents an administrative burden, especially for small and medium-sized enterprises. Implementing effective systems may require additional investments in technologies and training.

The CSRD directive focuses on reporting information on sustainability, and the CSDDD directive imposes on companies the obligation to actively implement sustainable measures. The question of amending these directives divides the member states as well as investors – the latter warn that excessive interventions may lead to regulatory uncertainty. The European Commission has nevertheless decided to proceed with changes to these directives.

The Omnibus packages – an effort to simplify the legislation

The European Commission is preparing packages of measures called Omnibus, the aim of which is to simplify the regulations in the area of sustainability. Two such packages were published on 26 February 2025. The measures in these two packages focus on amendments concerning the simplification of non-financial reporting, due diligence in the area of sustainability, taxonomy and CBAM, with an emphasis on reducing the bureaucratic burden for smaller enterprises.

The proposals presented in the Omnibus packages will cause the following:

• roughly 80% of enterprises will be excluded from the scope of the CSRD and CSDDD directives,
• roughly 90% of enterprises will be excluded from the mandatory taxonomy.

Both packages, however, still have to pass through the European Parliament and subsequently the Slovak legislator must also take a stance on the decision. For now, therefore, it is uncertain what exactly will happen.

The CSDDD directive was adopted in June 2024. The original transposition deadline is in July 2026. It will probably change so that it comes into force at approximately the same time as companies will have to start disclosing sustainability reports under the CSRD directive. The specific dates, however, are still the subject of discussions at the European level.

It is likely that the conditions in the CSRD directive will change as follows:

• Starting 1 January 2025 (originally 1 January 2024), information on sustainability must be disclosed by large accounting entities that already had this obligation under the NFRD directive.

Subsequently, according to the proposal, the implementation date in each wave should be postponed by one year, namely:

• Starting 1 January 2026 (originally 1 January 2025), information on sustainability must be disclosed by all large accounting entities that have more than 1,000 employees and exceed certain threshold values of assets or turnover.
• Small and medium-sized enterprises listed on the stock exchange must report information on sustainability from 1 January 2027(originally 1 January 2026).
• Large subsidiaries whose parent entity is established outside the EU are obliged to report information on sustainability from 1 January 2029 (originally 1 January 2028)

Why are these changes happening?

The European Commission indicates as the main reasons that the implementation of the rules concerning the reporting of non-financial information is excessively complex and at the same time it wants to give businesses more time to prepare.

In addition to changes in deadlines, the proposals contained in the Omnibus packages also contain some technical changes to the existing directives. The situation therefore needs to be monitored further, since nothing has yet been approved by the European Parliament. Therefore it is important to emphasise that if you have already implemented some processes in relation to the CSRD or CSDDD directive, do not throw it in the bin, but continue your efforts. Nothing is yet certain or cancelled; the proposals focus mainly on simplification and the postponement of implementation.

Businesses need stability and clear rules

The disclosure of ESG information is key to eliminating the lack of data that is holding back sustainable investments. Investors emphasise that timely access to high-quality and comparable reports is essential to support informed investment decisions.

Businesses and financial institutions therefore need a stable legislative framework that will allow them to effectively implement the requirements without frequent fundamental changes.

How can we help you?

Together with APZD, we are closely monitoring the current development of ESG legislation with the aim of informing you and helping you to adapt to the new requirements. We are therefore preparing a seminar at which you will be able to discuss with experts and obtain practical advice.

At the same time, we want to create space for mutual support among companies that are already actively engaged in the topic of sustainability. Therefore, if your company is already taking steps in the area of ESG, let us know. Write to us at galajdova@apzd.sk. We would like to learn more about your experiences and help you move further along the path to sustainable business.

Source: APZD