Omnibus Proposal & Your ESG Report: What’s Changing and How to Stay Compliant

The Omnibus proposal has arrived, shaking up ESG reporting and raising big questions for sustainability managers. If your company has fewer than 1,000 employees, you might be wondering:

• - Will CSRD (Corporate Sustainability Reporting Directive) still apply to us?
• - What does this mean for our upcoming ESG report?
• - Should we still move forward with double materiality and data collection?

The good news is that sustainability reporting isn’t going away, but the way companies report might change.

In this blog, we’ll break down the Omnibus proposal’s key updates, how to stay compliant amid changes, and how ESG reporting automation can help you simplify your process.

Key Changes in the Omnibus Proposal for CSRD

The Omnibus proposal is designed to reduce bureaucracy and streamline sustainability reporting. Here are the biggest updates:

CSRD Now Applies Only to Companies with 1,000+ Employees

Previously, CSRD applied to companies with 250+ employees. Now, only larger companies will be required to report.

If your company has fewer than 1,000 employees, you may no longer be legally required to report under CSRD, but transparency remains a competitive advantage.

The Introduction of VSME

The Voluntary Sustainability Reporting Standard (VSME) will act as an alternative reporting framework for non-listed SMEs.

Companies under 1,000 employees can still report ESG data voluntarily using VSME, ensuring transparency and alignment with stakeholders such as banks, investors, and customers.

Sector-Specific Reporting Standards Removed

Companies no longer need to comply with sector-specific sustainability standards, simplifying reporting requirements.

This change reduces complexity, allowing businesses to focus on key sustainability priorities instead of additional sector-based obligations.

CSRD Reporting Deadlines Postponed

The second wave of CSRD reporting, originally planned for 2026, has been delayed by two years.

For companies that were set to report in 2026, this means more time to prepare, though ESG reporting remains an important priority.

Revisions to ESRS (European Sustainability Reporting Standards)

The first set of ESRS will be revised to reduce complexity and align better with international standards.

This revision aims to simplify the reporting process and ensure ESG disclosures are more material and relevant.

Clarifications on Assurance Requirements

Instead of requiring reasonable assurance, the European Commission will issue guidelines for limited assurance.

This means less auditing pressure while still ensuring that ESG reports are credible and transparent.

What Happens Next?

The Omnibus proposal is not law yet. It still needs approval from the European Parliament and the Council of the EU.

Once approved, these changes will be implemented into national laws, including in Belgium.

Negotiations between the Commission, Parliament, and Council (known as “trilogues”) are expected to take six to nine months.

While CSRD deadlines may shift, ESG reporting isn’t going anywhere. Companies should still prepare their sustainability data to remain ahead of future regulatory changes.

How to Stay CSRD-Compliant Amid Uncertainty

Depending on where you are in your CSRD reporting journey, here’s how to stay on track.

Complete Your Double Materiality Assessment (DMA)

Even with regulatory changes, double materiality remains a key requirement under CSRD.

Conducting a double materiality assessment helps identify ESG priorities and improves stakeholder engagement. The European Commission has also confirmed that the requirement for double materiality will not change.

If you haven’t completed your double materiality assessment, now is the time to do so.

Avoid Manual Fit-Gap Assessments – Use AI Instead

A fit-gap assessment helps you check what ESG data you already have and what’s missing.

Doing this manually can be time-consuming and expensive, especially as regulations continue to shift. Using AI-driven ESG reporting automation can simplify this process, helping you adapt to new regulations without additional costs.

Companies should consider automating their fit-gap assessment to save time and resources while ensuring compliance.

Stay Flexible and Adaptive with CSRD Reporting

The final step in the CSRD reporting process involves consolidating and structuring your ESG report. However, with the Omnibus proposal introducing potential scope changes, it’s important to remain adaptable as reporting requirements evolve.

A flexible approach will help ensure compliance, and AI technology can play a crucial role in making this process smoother. By automating ESG reporting, AI can pre-fill reports using existing company data, significantly reducing manual effort. This allows teams to focus on strategic sustainability initiatives rather than getting caught up in administrative tasks.

While automation helps streamline reporting, having a structured ESG reporting framework is equally important. Following established EFRAG frameworks such as ESRS or VSME ensures consistency, transparency, and alignment with key stakeholders. This is what we consider a “no-regret move”, a decision that benefits your company regardless of regulatory changes.

Why is structured ESG reporting essential?

• - Stronger stakeholder communication: The Omnibus proposal limits ad-hoc data requests from suppliers and customers. Banks and financial institutions will also require standardized ESG data, much of which aligns with VSME requirements. Having a structured approach prevents reporting inefficiencies and ensures compliance with evolving expectations.
• - Internal sustainability engagement: A well-structured CSRD report helps employees understand the company’s sustainability progress, fostering accountability and alignment across teams.
• - Long-term regulatory alignment: While CSRD timelines may shift, Europe remains committed to its climate neutrality goals. As confirmed by European Commission President Ursula von der Leyen, sustainability remains a strategic priority, even if immediate reporting deadlines are adjusted.
• - Investor confidence and Green Deal alignment: Structured ESG reporting enhances transparency, supports accountability, and ensures companies remain attractive to investors. It also plays a critical role in aligning corporate sustainability efforts with the EU Green Deal.

By embracing AI-driven ESG reporting and following structured reporting frameworks, companies can stay prepared, reduce compliance risks, and maintain a competitive edge, regardless of regulatory changes.

Stay Compliant Without Bureaucracy

Instead of dealing with complex spreadsheets and manual reporting, sustainability teams can leverage technology to simplify compliance.

Karomia’s AI-powered ESG reporting automation can:

• - Pre-fill reports using existing company data
• - Compare provided data to CSRD and VSME requirements
• - Flag missing information needed to complete the report
• - Generate structured ESG reports within hours, reducing manual effort

By using automation, ESG managers can focus on strategic sustainability initiatives rather than getting stuck in compliance paperwork.

To ensure compliance without excessive administrative work, consider transitioning to an AI-powered ESG reporting platform.

Start Automating Your ESG Report Now

ESG Reporting Is Still a Competitive Advantage

Even if CSRD reporting requirements change, sustainability transparency remains critical for: investor confidence, stakeholder trust, and regulatory alignment.

Companies that stay ahead of ESG reporting changes will have a competitive advantage, whether reporting is mandatory or voluntary.

The best way to stay prepared is to keep ESG reporting structured, efficient, and automated.