What are Germany’s Proposed Changes to EU's Omnibus CSRD?
Germany has laid out a series of recommendations for revising the Corporate Sustainability Reporting Directive (CSRD), urging significant changes to streamline compliance and improve comparability between companies.
The proposals, put forward by the Sustainable Finance-Beirat (SFB), focus on reducing the reporting burden while maintaining transparency and effectiveness in sustainability disclosures.
These recommendations come at a crucial time as EU legislators work through the Omnibus package, a broader legislative effort to amend financial and sustainability reporting requirements across member states.
Reducing the burden on businesses
One of Germany’s main concerns is the complexity and sheer volume of data that companies are required to report under the CSRD.
The SFB has called for a drastic reduction in the number of required data points, especially for small and medium-sized enterprises (SMEs), arguing that the current framework creates excessive administrative burdens without necessarily improving transparency.
- The CSRD is a directive designed to improve and expand sustainability reporting by companies within the EU. As a framework, it aims to increase transparency and standardisation in how companies report on their environmental, social, and governance (ESG) impacts.
- The Corporate Sustainability Due Diligence Directive (CSDDD) focuses on corporate accountability for sustainability and human rights within a company’s value chain. Its goal is to ensure businesses identify, prevent and mitigate adverse impacts on human rights and the environment.
“The sector approach might seem like a good idea at first, but business models are not always structured to fit into one specific sector, but are rather a mixture of many different sectors,” says Helena Mueller, Director Advisory at Grant Thornton Sweden.
Instead, Helena points to the benefits of the double materiality assessment (DMA), which encourages businesses to analyse their specific risks, opportunities, and sustainability impacts within a broader industry context.
Sector-based materiality and comparability
Germany’s proposal to replace the current double materiality approach with a sector-wide materiality assessment has sparked debate.
The idea is that businesses within the same sector should have pre-defined material sustainability topics, reducing the need for individual companies to conduct complex, resource-intensive assessments from scratch.
This could enhance comparability and reduce inconsistencies in reporting across industries.
However, experts remain divided.
“The sectoral sets should cover matters that are material from both an impact and/or financial viewpoint for each given sector,” explains Eric Lindholm, Head of ESG and Sustainability Reporting at Ericsson.
Germany's approach stops short of calling for a delay in implementing the CSRD, which had been previously suggested by Chancellor Olaf Scholz.
Instead, the SFB advocates for speeding up the legislative process to provide companies with clarity as soon as possible.
Cutting complexity and standardising transition plans
Beyond materiality assessments, the SFB has also proposed standardized templates for climate transition plans to ensure consistency and ease of use.
Current CSRD requirements mandate that companies disclose their transition plans, but without a clear structure, there is a risk of fragmented and inconsistent reporting.
Germany's recommendation is to provide businesses with predefined templates that would allow investors to better compare different companies' progress toward sustainability goals.
“The CSRD will provide valid and comprehensive data in the future. This allows investors to estimate how sustainable the business models of their investment properties are,” says Silke Stremlau, Chairwoman of the Sustainable Finance-Beirat.
Balancing transparency with practicality
While Germany’s recommendations seek to simplify the reporting process, there is a risk that reducing data requirements too drastically could undermine the directive’s core purpose: ensuring that companies provide meaningful and comparable sustainability information.
“We welcome the basic idea of CSRD: only with comparable, reliable and relevant data can sustainability be taken into account in company or portfolio management,” explains Bettina Storck, Head of the CSRD writing group in the Regulatory Coherence Working Group.
“At the same time, reporting must not distract from the actual goal - sustainable transformation.”
The German proposals highlight a broader tension within EU sustainability policy: how to make corporate sustainability reporting both rigorous and manageable.
While some businesses and regulators fear excessive complexity, others argue that strong reporting standards are necessary to drive genuine environmental and social progress.
What comes next?
The EU’s Omnibus package is expected to consolidate multiple legislative changes, including potential revisions to the CSRD.
If Germany’s recommendations gain traction, the final framework could see a shift toward sector-wide materiality assessments, fewer required data points and greater standardisation in transition plan disclosures.
“Given Germany’s weight in the EU, these could be worth paying attention to,” says Tom Carr, Sustainability Strategy Director at SB+CO.
Despite Scholz’s previous calls for delays to CSRD, Tom notes that Germany’s Chancellor now wishes that the whole process would speed up.
“These proposals don't feature Olaf Scholz’s suggestion of delaying CSRD, instead arguing for the legislative process to be sped up to deliver certainty for business more quickly,” he says.
As discussions continue, the sustainability community will be watching closely to see how these proposed changes shape the future of corporate ESG reporting across the EU.
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