Simplification and Clarification of EU Sustainability Rules – Moving in the Right Direction

On 26 February 2025, the European Commission published a proposal for the first Omnibus package – “Omnibus I” –  aiming at simplifying 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).

The Commission has a target to achieve at least 25% reduction in administrative burdens, and at least 35% for SMEs until the end of this mandate. In its Communication on the Competitiveness Compass for the EU, the Commission confirmed that it would propose a first ‘Simplification Omnibus package’. Omnibus I package includes amongst others:

• A proposal for a Directive amending the CSRD and the CSDDD;
• A proposal which postpones the application of all reporting requirements in the CSRD for companies that are due to report in 2026 and 2027 (so-called wave 2 and 3 companies) and which postpones the transposition deadline and the first wave of application of the CSDDD by one year to July 2028.
• A draft Delegated act amending the Taxonomy Disclosures and the Taxonomy Climate and Environmental Delegated Acts.

Amongst the Commission proposals are:

• Scope. Taking out of the CSRD scope large undertakings with up to 1000 employees and listed SMEs (i.e. all undertakings in the third wave). 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).
• Voluntary standards. For undertakings not subject to mandatory sustainability reporting requirements, 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. And the limit would be defined by the voluntary standard adopted by the Commission.
• Sector-specific standards. There would be no sector-specific reporting standards (ESRS).
• Taxonomy reporting. An opt-in regime is introduced where large undertakings (with more than 1000 employees and with a net turnover not exceeding EUR 450 million) which claim that their activities are aligned or partially aligned with the EU Taxonomy shall disclose their turnover and CapEx. This is in line with the aim to scale up transition finance.
• 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.

Furthermore, the Commission intends to revise the sector agnostic ESRS in order to clarify provisions that are deemed unclear, foster consistency with other pieces of EU legislation and provide instructions on how to apply the materiality principle.

The Commission proposals are now under examination by the European Parliament and the Council of the EU. The EU co-legislators will propose their amendments to the Commission proposal and will need to reach an agreement on the final rules. Currently, EP and Council are considering amendments to further raise the thresholds of the scope for both the CSRD and the CSDDD.

 On 14 April 2025, the Commission proposal on the postponement of the application dates was adopted. This Directive postpones by two years the entry into application of the CSRD requirements for large companies that have not yet started reporting (January 2027), as well as for listed SMEs (January 2028). The Directive also postpones by one year the transposition deadline of the CSDDD and its first phase of the application covering the largest companies (from 26 July 2028).

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’. Available through member associations, 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 the European Financial Reporting Advisory Group (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 ‘Do No Significant Harm’ requirements for electric vehicles.