While headlines clouded what the Omnibus proposals really meant, business leaders should see the opportunity. The Omnibus simplifies compliance by raising thresholds, reducing tracked metrics, and delaying timelines. A two-year reporting delay allows companies time to build their sustainability data foundation before compliance obligations kick in. Smart CFOs will use this time to turn sustainability reporting into a strategic asset. The right data integration now can shape your company’s resilience — and profitability — for years to come.

The EU Omnibus changes generated uncertainty for business leaders, which media intensified by pointing out “costly confusion” and even “catastrophic changes.”

Regulatory changes can be confusing at first, but the Corporate Sustainability Reporting Directive (CSRD) changes should actually bring more clarity to sustainability reporting.

While most changes are still subject to final approval, corporate finance leaders should take advantage of the confirmed two-year reporting delay to build their sustainability data foundation. This will not only ensure regulatory compliance when the time comes, but the right data integration can be the key to achieving both financial and sustainability goals.

What are the changes in the Omnibus?

The Omnibus adjusts compliance thresholds, shifts reporting timelines, and removes the burden of CSRD reporting for small and midsize enterprises. Changes include:

• Companies not yet required to report on FY 2024 will have a two-year delay (until 2028) before they must report with the CSRD
• Companies must have 1,000 employees and €50 million net turnover, or €25 million balance sheet to meet CSRD reporting threshold
• Limited assurance requirements are implemented in place of reasonable assurance
• Sector-specific reporting mandates have been eliminated
• Value chain data is only required from suppliers that also meet the reporting threshold

The reporting delay has been confirmed. All other proposed changes are still subject to final approval.

What remains untouched in the Omnibus proposals?

Large European companies — those that were required to report with the Non-Financial Reporting Directive (NFRD) — are still required to report with the CSRD this year for FY 2024, and are required to continue reporting despite the proposal. The pool of companies required to report will still expand, but now with a two-year delay. The timeline for non-EU  parent companies has not changed. Companies with a two-year delay will still need to start preparing data at least 12 months ahead of their new reporting deadlines, and find a software solution well before that.

Double materiality assessments, supply chain emissions, KPI identifying and tracking, and transition planning are all still fundamental to the CSRD. Supply chain data insights are also requirements of the Corporate Sustainability Due Diligence Directive (CSDDD) and the Carbon Border Adjustment Mechanism (CBAM).

How can sustainability data improve business performance?

Rigorous sustainability reporting can drive operational efficiency. For example, sustainability data provides the insights needed to take action that supports effective risk management through visibility into risks and their strategic and financial impacts, and lowers costs by creating efficiency gains..

Collecting and managing data to comply with sustainability regulations requires robust data management software. The bare bones solution is the helpful, yet error-prone, Excel spreadsheet, while at the opposite end of the spectrum is the ERP-centric system.

The spreadsheet may painstakingly serve the compliance function, but it lacks the ability to provide real-time insights that align sustainability goals with financial goals. What’s worse is that after data is collected and reported, it lives — and dies — on the spreadsheet, offering no added value, and certainly driving no business transformation.

In contrast, by using an ERP-centric system, data needed to comply with sustainability regulations can be pulled, aggregated, and integrated into business systems like finance, procurement, and HR. In fact, an ERP-centric system can already provide access to as much as 85 percent of the quantitative data required for CSRD compliance.

When sustainability data is integrated with company financials, CFOs can clearly see where their business is exposed to risk, and where opportunities for cost savings and untapped growth lie.

When this integration is combined with AI forecasting tools, businesses can accurately forecast how sustainability initiatives impact earnings, risk exposure, and growth. Executives will no longer need to weigh the trade-offs of investing in sustainable business initiatives with short-term costs or long-term benefits. The impact of action, and inaction, is right there in front of you.

All the potential for smart insights starts with a comprehensive data foundation. Once sustainability data systems are established, they can be integrated with financial data through an ERP-centric system, unlocking the insights that CFOs need to steer their business towards its sustainability and financial goals.

Prepare for compliance and transformation

The Omnibus offers an opportunity to develop a strategic, technology-enabled approach to sustainability reporting that drives long-term business value.

Coincidentally, auditors recommend two years of preparation before a reporting deadline hits. Now is the ideal time to establish your company’s data foundation to ensure regulatory compliance — and unlock the financial opportunities of sustainability.

To learn even more about the Omnibus changes and how an ERP-centric system can benefit your business, read SAP’s latest white paper on mastering CSRD.