Key changes:
- 80% fewer companies in scope (CSRD) – Only large companies with more than 1,000 employees and more than €50 million in revenue or more than €25 million in balance sheets remain subject to CSRD.
- Wave 1 (companies with< 1000 employees):
- There is still uncertainty regarding reporting obligations for the financial years 2025 and 2026. The scope changes proposed in the Omnibus package have not yet been approved and incorporated into national legislation.
- Wave 2:
- Reporting obligations have been postponed by two years. This delay ensures that companies do not prepare reports that could become obsolete if regulations change.
- Wave 3:
- Similar to Wave 2, reporting obligations have been delayed by two years. The postponement aims to reduce administrative burdens and provide companies with more time to adjust.
- Wave 4:
- No direct mention of changes specific to Wave 4. However, companies with >1000 employees and revenue >€450M will be required to comply with CSRD & EU Taxonomy from 2027 and CSDDD from 2029.
- Wave 1 (companies with< 1000 employees):
- Reporting delays – Companies originally set to report in 2026 or 2027 now have until 2028.
- EU Taxonomy reporting softened – Now only mandatory for the largest companies, with a 70% reduction in reporting obligations for them. For all other businesses, reporting will be voluntary.
- Supply chain relief – SMEs are no longer obligated to report under larger companies’ CSRD requirements.
- Simplified due diligence limitations (CSDDD) – One-year delay and reduced data request obligations for supply chain partners.
Additional insights on the European Commissions Omnibus Proposal
EU Taxonomy & investments
- The EU Taxonomy remains a crucial tool for guiding sustainable investments and avoiding greenwashing. While the Omnibus makes reporting voluntary for most companies, clear ESG data will still be a competitive advantage for attracting funding.
Changes to CSDDD – Due Diligence now limited to tier 1
- The Omnibus reduces the scope of due diligence obligations, limiting reporting requirements to direct (Tier 1) supply chain partners instead of the entire supply chain. This may make reporting easier but could also reduce visibility into deeper supply chain risks.
- *If NGO or government reports highlight potential issues within a company’s supply chain, businesses can use these reports as a basis to investigate further, continuing to ask critical questions beyond Tier 1 supply chain partners
But transparency should not stop at Tier 1—leading businesses will continue to trace and authenticate beyond the minimum requirements to future-proof their business. The fashion and adjacent industries are opague and will benefit from supply chain transparency beyond Tier 1. Real improvements for a better ecosystem can only be achieved based on verified supply chain insights. We expect this to be confirmed in the Sectoral action plan (See next point).
Sectoral action plans: a more tailored approach to sustainability
- The European Commission’s Sectoral Action Plans are expected to provide industry-specific sustainability guidelines as part of the broader Green Deal and competitiveness strategy. While the Omnibus adjusts CSRD reporting requirements, these action plans will aim to align sustainability efforts with the realities of different industries, ensuring that companies can implement ESG measures that are both impactful and achievable within their sectors.
For businesses, this presents an opportunity to stay ahead by aligning with these upcoming sector-specific frameworks. Rather than relying on a one-size-fits-all approach, companies will be able to benchmark their ESG progress against tailored industry standards—further strengthening their transparency strategies and market positioning.
Futureproofing with ESG and transparency despite CSRD changes.
ESG is not just a compliance requirement—it helps companies become resilient, agile, and ready for long-term success.
Eight reasons to continue with CSRD initiatives, even if companies are no longer in scope, are:
- Foster innovation culture and sustainable growth
Working on ESG initiatives encourages an innovative culture by inspiring employees to think creatively about sustainable solutions and more efficient processes. This leads to a workplace that prioritises continuous improvement and adaptation.
- Build a strong and future-proof business
ESG integration strengthens businesses, making them more resilient and adaptable in an evolving economic and regulatory landscape.
- A must for (new) employees
To attract and retain top talent, ESG is increasingly seen as essential for good employment practices. Employees want to work for companies that prioritise sustainability and responsibility.
- Ongoing demand from customers and other stakeholders
ESG data will remain essential as banks, insurers, investors, and major buyers will continue requesting ESG performance data—even for companies no longer under CSRD scope.
- Access to and efficient use of capital
Investing in ESG makes it easier and more cost-effective to attract funding. By continuing ESG integration, companies can capitalise on past CSRD investments while also improving efficiency, reducing costs, and enhancing performance.
- Take social responsibility
Companies have a social responsibility. ESG helps businesses understand risks, impacts, and opportunities, enabling proactive actions to improve sustainability.
- Prepare for future regulations
Being ready for future compliance is key. ESG regulations will continue evolving, and companies that stay ahead will benefit from a competitive advantage. Delaying action now could mean scrambling to catch up later.
- Preserve the planet
Business operations should focus on reducing material use, preventing pollution, and protecting biodiversity to safeguard the planet for future generations.
Source: Baker Tilly, Kennisartikel, click here to find out more.
Different routes to ESG reporting
The Omnibus shifts the legal obligations, but companies can still voluntarily align with CSRD or alternative ESG frameworks such as:
- CSRD-compliant reporting (for those who want to be ahead of future regulations).
- VSMEs – A voluntary framework designed for SMEs to provide consistent sustainability data without full CSRD compliance.
- Company-defined ESG strategy – Businesses can develop custom sustainability reports focused on the most relevant topics for their operations.
What should you do?
At tex.tracer, we firmly believe that transparency is not a compliance checkbox—it’s a necessity for the future of business. Legislation plays acrucial role in establishing a strong foundation, but companies should aim beyond compliance—leveraging reliable supply chain data, automated reporting, and proactive improvement strategies. While the Omnibus adjusts legal obligations, it does not change the long-term trajectory of ESG. Regulatory frameworks, investor expectations, and customer demands for transparency will continue to evolve. Businesses that act now will not only stay ahead of compliance but will set the standard for responsible and future-proof operations.
Regulations may shift, but the industry must keep moving forward. Compliance should be the baseline, not the goal. The companies that have already taken steps toward improving their supply chains should not slow down now—instead, they should continue to lead, setting new standards that others will follow. The extended timeline provides companies with an opportunity to move beyond basic compliance and focus on innovation.
We therefore encourage companies to still act and actively choose to continue their journey toward a responsible future. Businesses that continue investing in ESG and transparency will be the ones attracting financing, securing supply chain partnerships, and gaining customer trust—because sustainability expectations are not disappearing, even if the reporting burden has shifted. In fact, seven in ten CFOs expect higher returns from sustainability investments, reinforcing that prioritising ESG is not just an ethical choice but a financially strategic one (edie, February 25, 2025).
By embedding transparency and accountability into their business models and working with the tex.tracer platform to do so in a more meaningful and effective way, companies can:
- Create long-term value beyond compliance – Transparency is not just a regulatory necessity—it is a business enabler. By embedding traceability into operations, companies build trust, resilience, and market differentiation that extends far beyond short-term reporting requirements.
- Automate ESG and due diligence processes – Simplifying supply chain reporting and reducing manual workload allows businesses to focus on impact rather than administration. This ensures sustainability strategies are scalable and integrated into core operations.
- Strengthen collaboration with supply chain partners and clients, fostering meaningful partnerships that enhance data quality, improve traceability, and create deeper value chain insights.
Rather than viewing this as a delay, businesses should seize this opportunity to deepen their ESG commitments, strengthen supply chain resilience, and take ownership of their transparency journey. Those who act now won’t just meet expectations—they will shape the future of responsible business, securing their place as leaders in a more transparent and sustainable economy.
Want to find out more about how tex.tracer can help you? Book a free demo now!
