Simplification and Clarification of EU Sustainability Rules

The European Commission’s Omnibus simplification package bring significant changes to sustainability reporting requirements, Taxonomy reporting and application dates. At the same time, many lessors are already needing to report at least some key metrics including Scope 1, 2 and 3 emissions and, for banks, the Green Asset Ratio. Leaseurope has continued to seek confirmation that lessors should report emissions of leased equipment only as Scope 3. We have also called for clarification of value chain reporting requirements, to confirm that lessors who do need to report can rely on readily available information from manufacturers. Meanwhile to assist lessors, Leaseurope’s Taskforce on Sustainability and ESG reporting has prepared voluntary guidance that has been distributed to member associations. Leaseurope has also defined a new voluntary reporting measure, Transition Asset Finance.

Omnibus I Package – Revision of CSRD and CSDDD

On 26 February 2025, the European Commission published the first Omnibus simplification package – “Omnibus I”, which laid down a proposal amending corporate sustainability and due diligence reporting requirements. These rules are laid down in the CSRD (Corporate Sustainability Reporting Directive), the EU Taxonomy Regulation and the CSDDD (Corporate Sustainability Due Diligence Directive).

In addition to this proposal, the omnibus I package included other legislative initiatives: (i) proposal to postpone the applications dates of certain corporate sustainability reporting and due diligence requirements (“Stop-the-clock” proposal);

(ii) proposed amendments to Taxonomy Delegated Regulations.

Amongst the main points in the Commission proposals are the following:

• Scope. Excluding from the CSRD scope large undertakings with up to 1000 employees and listed SMEs. The reporting requirements would only apply to large undertakings with more than 1000 employees (and either a turnover above EUR 50 million or a balance sheet above EUR 25 million). Similarly, only subsidiary undertakings that meet these criteria will be in the scope. For branches to be in the scope they need to have net turnover of EUR 50 million.  
• Voluntary standards. For undertakings not subject to mandatory sustainability reporting requirements (e.g. listed SMEs, undertakings with up to 1000 employees), the Commission proposes a proportionate standard for voluntary use which would be based on the VSME standard developed by EFRAG.  
• Value Chain. A value chain cap would apply to all undertakings with up to 1000 employees rather than just SMEs as is currently the case. Undertakings should not seek to obtain from undertakings in their value chain with no more than 1000 employees on average during the financial year any information that goes beyond the information specified in the voluntary standards.  
• Sector-specific standards. There would be no sector-specific reporting standards (ESRS).  
• CSDDD. Amending the CSDDD by – amongst others – targeting due diligence to direct business partners as a general rule, by removing the duty to terminate the business relationship as a measure of last resort, by deleting the review clause regarding financial services, by aligning the provisions on transition plans for climate change mitigation with CSRD.

The Commission proposal is under examination by the European Parliament and the Council of the EU. The Council adopted its own position on the proposal which also suggests to increase the employee threshold to 1000 employees and to remove listed SMEs from the scope. Furthermore, the Council proposes adding as criterion a net turnover threshold of over EUR 450 million. Regarding CSDDD, the Council proposes to limit the scope to undertakings with 5000 employees and EUR 1.5 billion net turnover. On the other hand, the EP has not adopted its own position yet. The EP rapporteur’s draft report proposes limiting both the CSRD and the CSDDD scope to undertakings with more than 3000 employees and a net turnover of EUR 450 million. A vote will follow in the EP in October 2025 in order to adopt the final EP Report. At the moment, the various political groups have diverging positions about which direction should be taken and whether the scope should be limited.

Once both the Council and the EP have their positions ready, inter-institutional negotiations will begin to reach an agreement on the final text of the Directive.

Proposal to postpone application dates of CSRD and CSDDD

On 14 April 2025, the Commission proposal on the postponement of the application dates was adopted (“stop-the-clock”). This Directive postpones by two years the entry into application of the CSRD requirements for large companies that have not yet started reporting (from January 2027), as well as for listed SMEs (from January 2028). The Directive also postpones by one year the transposition deadline of the CSDDD, namely by 26 July 2027 national rules transposing the CSDDD should be adopted. Moreover, it postpones the first phase of the application covering the largest companies. Companies with more than 3000 employees and net turnover of more than EUR 9 million will need to comply with CSDDD from 26 July 2028.

Amendments to EU Taxonomy

On 4 July 2025, the European Commission adopted a Delegated Act to simplify the application of the EU Taxonomy, as part of the Omnibus I package. This Delegated Act includes amendments to the Taxonomy Disclosures, Climate and Environmental Delegated Acts.

The Delegated Act was transmitted to the European Parliament and the Council for their scrutiny. The changes will apply once the scrutiny period of 4 months, which can be prolonged by another 2‑month period, is over. The simplification measures laid out in this Delegated Act will apply as of 1 January 2026 and will cover theFY   2025. However, undertakings are given the option to apply the measures starting with FY 2026.

This Delegated Act includes a de minimis threshold of 10 % which would allow reporting companies to focus their efforts on assessing the taxonomy-eligibility and alignment of those activities that represent a significant share of their revenues, capital or operational expenditures. Furthermore, non-financial undertakings will be allowed not to report on the taxonomy-eligibility and alignment of operational expenditure if the OpEx KPI is not material for their business model. For financial undertakings, this rule would permit them not to assess the taxonomy-eligibility and alignment of up to 10% of their financial assets (in particular, loans and investments financing specific economic activities, i.e. whose use of proceeds is known). For general purpose loans and investments, financial undertakings will directly rely on reported information concerning non-material activities of their counterparties. This also covers reporting in the Green Asset Ratio, meaning that credit institutions will not need to report certain KPIs capturing activities that are not material for their business. Finally, financial companies may delay detailed Taxonomy KPI reporting until 31 December 2027, provided they do not claim that their activities are associated with environmentally sustainable activities. A comprehensive review of the reporting rules and technical screening criteria should also follow.

ESRS Review for Simplification

As part of the simplification process, EFRAG (European Financial Reporting Group) published revised and simplified Drafts of the European Sustainability Reporting Standards (ESRS). The drafts of the revised ESRS appear to provide the clarification that Leaseurope has been calling for, namely that responsibility for reporting CO2 Scope 1 and Scope 2 impacts associated with leased assets should be the responsibility of lessees, and not lessors. Over the past year a priority for the Leaseurope Task Force on ESG & Green Leasing has been obtaining confirmation of the above, for which Leaseurope engaged with EFRAG. This development is particularly welcome, as on other matters specific to the definition of value chain for financial institutions, EFRAG has concluded that the complexity of the issues and timing of the consultation did not permit it to consider and test changes.

EFRAG is gathering feedback on the draft revised ESRS by end of September 2025. Once this consultation is closed, EFRAG will adopt its final decision on its advice to the Commission, and following that the European Commission will formally adopt the revised ESRS. The experts of the Task Force are further studying the revised draft ESRS and Leaseurope will submit its response to the EFRAG consultation focusing on leasing-specific issues.

 “Quick Fix” Amendments to ESRS

In another development, the European Commission adopted amendments to the first set of ESRS to reduce the burden for companies that had to start reporting for financial year 2024 (referred to as “wave one” companies, meaning public interest entities with over 500 employees). This is the “quick fix” Delegated Act adopted on 11 July 2025.

According to the current ESRS, companies reporting on FY 2024 can omit information on, amongst other things, the anticipated financial effects of certain sustainability‑related risks. The “quick fix” act extends this possibility to omit information on anticipated financial effects for FYs 2025 and 2026. This means wave one companies will not have to report additional information compared to FY 2024. Moreover, CSRD wave one companies with up to 750 employees are allowed to omit Scope 3 GHG emissions and total GHG emissions from their reporting for FYs 2025 and 2026. Other extensions of omission for FYs 2025 and 2026 are related to information regarding biodiversity, own workforce, workers in the value chain, affected communities, consumers and end-users. Moreover, for FYs 2025 and 2026, wave one companies with more than 750 employees will benefit from most of the same phase‑in provisions that currently apply to companies with up to 750 employees. A summary of the amendments can be found here.

Leaseurope is following actively the developments on the simplifications of sustainability requirements, particularly through the work of the dedicated Task Force on ESG & Green Leasing. To help lessors comply with the EU sustainability rules, Leaseurope has developed the following three papers:

1. Guidance on sustainability reporting for lessors

To help lessors to report under the CSRD and the European Sustainability Reporting Standards (ESRS), Leaseurope has released new guidance.

The Leaseurope Task Force on ESG & Green Leasing has completed work on a voluntary common approach regarding the obligation of leasing companies to report on the environmental impacts of their activities across the value chain (under the CSRD).

Key points in the guidance, available through member associations, include:

• The environmental impacts of the use of assets by lessees should be reported by the lessee as Scope 1 & 2 whatever the accounting treatment of the lease, with the lessor reporting Scope 3.  
• The relevance of reporting upstream and downstream Scope 3 will vary by lessor, depending on the extent to which the risks and opportunities of buying and selling assets for leasing forms a substantial part of their value chain.
• For lessors that do report downstream Scope 3 emissions, it should be possible to estimate values using available data from manufacturer sustainability reports and high-level assumptions.

The aim of publishing the voluntary guidance is to share the expertise of the Taskforce across the industry, reducing reporting costs and uncertainty and leading to more consistent and useful sustainability information.

2. Draft Transition Asset Finance voluntary measure published

To help lessors to report their sustainable activities, Leaseurope releases a new Transition Asset Finance voluntary measure definition

Building on Leaseurope’s previous work to raise awareness on the role of the industry in supporting European businesses to transition towards net zero, Leaseurope’s Taskforce on ESG and Green Leasing has prepared a practical definition of ‘Transition Asset Finance’. The new voluntary measure is intended to help lessors to measure and report the full size of their sustainable finance book, even activities that are partially aligned with EU Taxonomy. The use of a common definition is intended to facilitate clear, transparent and consistent reporting by leasing businesses that choose to report in this way.

​​​​​​​​​​​​​​3. Simplifying and improving sustainability regulation and support for sustainable investment

Leaseurope is providing sector-specific input to the European Commission as it aims to simplify how European businesses, including lessees and lessors, measure and report their sustainability.

As the European Commission progresses its plans under the “omnibus” programme to simplify sustainability reporting requirements, Leaseurope has contributed information to several consultations. As EFRAG is no longer expected to publish sector-specific sustainability reporting standards, Leaseurope’s recent feedback to EFRAG, the Global Reporting Initiative (GRI) and the European Commission, highlighted the need for sector-specific guidance. This should include:

• Confirmation of EFRAG’s earlier published position that the environmental impacts of the use of assets by lessees should be reported by the lessee as Scope 1 & 2 whatever the accounting treatment of the lease, with the lessor reporting Scope 3. 
• Guidance on how to report transition finance, potentially using Leaseurope’s definition for a voluntary Transition Asset Finance measure.
• Improvements to the Green Asset Ratio, including more logical and consistent treatment of operating leases.
• Clarification and improvement of the Taxonomy ‘Do No Significant Harm’ requirements for electric vehicles.

You can also see our paper on the role of leasing in enabling transition to a sustainable EU economy here.​​​​​​​