CSRD Implementation Act

The Omnibus package published by the EU Commission in February 2025 aims to reduce the administrative burden for companies when implementing the CSRD regulations first imposed by the EU in 2022. The draft bill on sustainability reporting published by the Federal Ministry of Justice and Consumer Protection (BMJV) on July 10, 2025 now confirms the planned simplifications for CSRD user companies.

Reporting on sustainability commitments has long since become a central component of modern corporate management. With the Corporate Sustainability Reporting Directive (CSRD) from 2022 and the so-called omnibus package on sustainability reporting (from February 2025), the European Union is now creating reliable milestones to promote transparency in reporting with regard to corporate environmental responsibility.

With the new draft bill for the CSRD Implementation Act, the German government is now to create the legal framework to transform the provisions of the Brussels Sustainability Directive into national law. The simplifications enacted in February 2025 as part of the omnibus package have already been recognized in the draft bill. According to the BMJV, the CSRD regulations are to be implemented on a 1:1 basis. So-called "gold plating", in which national transpositions of the EU requirements "overshoot" the actual scope of regulation, is not to take place. The intended "true to the original" transformation therefore also includes the "stop-the-clock" initiative, which gives some companies from later waves of implementation an additional two years of preparation time.

An initial implementation bill, which was introduced into the parliamentary process during the 20th legislative period, lapsed following the principle of discontinuity (or the break-up of the traffic light coalition and the subsequent new elections) and therefore had to be reintroduced.

Currently, the Corporate Sustainability Reporting Directive (CSRD) applies to all large companies (defined as companies above two of the following three thresholds: EUR 50 million net turnover, EUR 25 million balance sheet total, 250 employees) and SMEs whose securities are listed on a regulated market in the EU. However, many companies and trade associations have suggested that smaller companies should be exempted, as they would be disproportionately burdened with the new reporting obligations. The omnibus package changes the current scope of the CSRD so that it now only applies to companies with over 1,000 employees (i.e. companies with over 1,000 employees and either a turnover of over EUR 50 million or a balance sheet total of over EUR 25 million). These companies are required to report in accordance with the European Sustainability Reporting Standards (ESRS), which are also being revised and simplified.

Focusing on key performance indicators and targeted and practical reporting is made easier, the administrative burden for companies is reduced and the reporting process is made more pragmatic. The German government is working hard to simplify the reporting obligations of the Corporate Sustainability Reporting Directive (CSRD) in a practical way - especially for German companies and groups.

• Rapid and legally compliant implementation of simplifications, e.g. substance proposal (COM(2025) 81 final)
• Relief for affected companies, especially the second and third wave with reporting obligations from 2027 and 2028 respectively
• Simplified legal framework before the first reporting of the companies concerned (depending on the size criteria)
• A large number of small and medium-sized companies could be exempt from the reporting obligation in future

• Länder and associations had until July 21, 2025 to comment on the draft bill. A statement by the DRSC (German Accounting Standards Committee), which is influential in Germany and generally welcomes the Federal Government's proposal, has already been published. The same applies to the opinion of the Institute of Public Auditors in Germany (IDW), which also approves of the German legislator's efforts.
• The Federal Government will submit a final draft after the consultation process has been completed.
• In light of the EU's infringement proceedings, the final law is to be presented promptly and enter into force by the end of 2025.

The new draft law makes various changes to the CSRD, taking into account the omnibus package, which ensure greater proportionality and easier implementation by companies:

• Less reporting companies: The reporting requirements would only apply to large companies. The number of companies falling within the scope of the CSRD will be reduced by around 80%.
• "Value chain limit" (Value chain cap): For companies that no longer fall within the scope of the CSRD, the Commission will adopt a standard for voluntary reporting based on the EFRAG SME standard.
• Commitment by the Commission to revise the European Sustainability Reporting Standards (ESRS), significantly reduce the number of data points, clarify provisions that are considered unclear and improve consistency with other legislation.
• Deletion of the standard for obtaining reasonable assurance.
• Deferral of the application of the reporting obligations: The package postpones the application of the reporting obligations for large companies that have not yet started implementing the CSRD and for listed SMEs (waves 2 and 3) by two years.

For forward-thinking companies in particular, where digital solutions form a core part of the business, the omnibus package offers not only challenges but also significant opportunities. Companies that focus on sustainable practices at an early stage can use their innovative strength to develop new products and services that offer added value both ecologically and economically.