By Huw Williams
Understanding CSRD, ESRS, and the Omnibus I Reforms
The European Union is introducing significant changes to corporate sustainability reporting through the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS). These frameworks aim to standardize and strengthen ESG disclosures across the EU. Although the UK is no longer part of the EU, British businesses that export to or operate within the EU may still be affected.
UK companies will be required to report under CSRD if they own an EU-based subsidiary with more than 250 employees, over 40 million in turnover, or more than 20 million in assets; are listed on an EU-regulated stock exchange; or generate more than 150 million in EU revenue and have at least one EU branch or subsidiary. These companies will need to begin reporting in 2028, covering the previous financial year.
Businesses in scope must conduct a double materiality assessment (financial and impact materiality), disclose ESG data across climate, workforce, governance, and other areas, align with the ESRS framework, prepare for limited assurance and digital tagging of sustainability data, and report on value chain impacts and transition plans.
In response to concerns about regulatory burden, the European Commission has proposed a simplification package known as Omnibus I, which includes major changes to CSRD and ESRS. These include reducing the scope so that only companies with more than 1,000 employees and either €50 million turnover or €25 million in assets remain in scope—removing around 80% of companies from CSRD obligations. A simplified, voluntary reporting standard will be introduced for SMEs to shield them from excessive data requests. The requirement for sector-specific ESRS has been removed, and revised standards will reduce mandatory data points and clarify materiality assessments. Assurance will remain at the limited level, with no transition to reasonable assurance. EU Taxonomy reporting will now be limited to companies with more than 1,000 employees and €450 million turnover.
I am not concerned as my business is not affected!
Even if your business is not directly in scope, you may still be affected. EU clients and partners may request CSRD-aligned data from suppliers, investors increasingly expect ESG transparency, and sustainability reporting is becoming a competitive differentiator.
To prepare, UK businesses should map existing ESG data and identify gaps, engage cross-functional teams (finance, legal, HR, sustainability), explore ESRS alignment tools and training, and consider voluntary reporting to stay ahead of market expectations.
If your business is navigating CSRD or ESRS readiness, now is the time to act. We encourage teams to begin internal assessments and explore how these regulations may affect operations, reporting, and stakeholder expectations. For further guidance or support.
My Perspective (Other perspectives are available)
The EU’s CSRD and ESRS represent a bold step toward harmonising sustainability disclosures, but the real test lies in implementation. While simplification under Omnibus I may reduce administrative burden, we must be cautious not to dilute the integrity of the data. Sustainability reporting is not just a compliance exercise—it’s a foundation for credible climate action.
From a verification standpoint, the shift to limited assurance is pragmatic, but it must be paired with capacity building and methodological rigor. Many companies—especially SMEs and non-EU exporters—lack the systems and expertise to produce reliable ESG data. Without robust guidance and training, we risk creating a reporting landscape that’s inconsistent and difficult to compare.
Ultimately, the success of CSRD and ESRS will depend on how well they align with international standards like the GHG Protocol and ISO 14064. If we want to drive real change, we need frameworks that are not only enforceable but also scientifically sound and globally interoperable.
Where does the UK stand? The EU is seen to be leading sustainability!
The UK is developing its own sustainability reporting framework known as the UK Sustainability Reporting Standards (UK SRS). These standards are designed to align with the global baseline set by the International Sustainability Standards Board (ISSB), specifically IFRS S1 (general sustainability disclosures) and IFRS S2 (climate-related disclosures).
The UK Sustainability Reporting Standards (UK SRS) are the UK government’s new framework for corporate sustainability disclosures, designed to align with the global baseline set by the International Sustainability Standards Board (ISSB). UK SRS S1 and S2 are the UK-endorsed versions of IFRS S1 and IFRS S2, covering general sustainability-related disclosures and climate-related disclosures respectively. These standards are currently under consultation and expected to be finalised by the end of 2025, with voluntary adoption initially and potential mandatory implementation from 2026 onward.
UK SRS focuses on financial materiality, meaning companies must report on sustainability risks and opportunities that could reasonably be expected to affect enterprise value. The standards require disclosures across governance, strategy, risk management, and metrics and targets, and are designed to integrate with general purpose financial reporting. This positions UK SRS as a globally interoperable framework, suitable for companies operating across borders.
In terms of technical foundations, UK SRS does not replace but rather complements established methodologies like ISO 14064-1, ISO 14068-1, and the GHG Protocol. ISO 14064-1 provides the principles and requirements for quantifying and reporting greenhouse gas emissions and removals at the organisational level. It is widely used for preparing verified carbon footprints and emissions inventories, which can feed directly into UK SRS climate disclosures. ISO 14068-1 supports credible carbon neutrality claims by setting out how to account for residual emissions and offsets, which is relevant for companies disclosing net-zero or climate transition plans under UK SRS S2.
The GHG Protocol remains the most widely adopted framework for emissions accounting globally and is referenced by nearly all major reporting systems, including CDP, TCFD, ISSB, and ESRS. Companies using the GHG Protocol for Scope 1, 2, and 3 emissions reporting will find that their data aligns well with the requirements of UK SRS S2, particularly in areas such as emissions quantification, boundary setting, and value chain analysis.
Together, UK SRS and these technical standards form a coherent reporting ecosystem. UK SRS sets the disclosure expectations, while ISO and GHG Protocol standards provide the methodologies for generating reliable, auditable data. Organisations that already use ISO 14064-1 or the GHG Protocol are well-positioned to meet UK SRS requirements, though they may need to enhance integration with financial reporting and ensure disclosures are decision-useful for investors.
What are all these acronyms and what do they mean?
ISSB
The International Sustainability Standards Board (ISSB) is a global standard-setting body established by the IFRS Foundation in 2021. Its purpose is to develop a comprehensive baseline for sustainability-related financial disclosures that can be used across jurisdictions and industries. The ISSB aims to address the growing demand for consistent, comparable, and reliable ESG reporting.
The ISSB standards are endorsed by IOSCO, the global body of securities regulators, which gives them strong credibility in international capital markets. Countries including the UK, Canada, Japan, and Singapore are actively working to adopt or align with ISSB standards, making them a key reference point for global sustainability reporting.
The ISSB’s goal is to reduce fragmentation in ESG reporting and provide a unified framework that supports investor decision-making and enhances transparency across borders.
IFRS S1
IFRS S1 is the International Sustainability Standards Board’s foundational standard for sustainability-related financial disclosures. It sets out the general requirements for companies to report on sustainability risks and opportunities that could reasonably be expected to affect their cash flows, access to finance, or cost of capital over the short, medium, or long term. The standard is designed to ensure that sustainability information is relevant to investors and other financial stakeholders, and that it is presented in a way that is consistent with financial reporting.
IFRS S1 requires companies to disclose material information across all sustainability topics, not just climate, and to explain how these issues are governed, managed, and integrated into their strategy and risk management processes. It also mandates that disclosures be connected to the company’s financial statements, using consistent assumptions and time horizons. The standard emphasises the need for clear, comparable, and verifiable data, and encourages companies to use metrics and targets to demonstrate progress.
Importantly, IFRS S1 is intended to be used alongside IFRS S2, which focuses specifically on climate-related disclosures. Together, these standards form the global baseline for sustainability reporting, aiming to reduce fragmentation and improve transparency across markets.
IFRS S2
IFRS S2 is the climate-specific disclosure standard developed by the International Sustainability Standards Board (ISSB). It provides detailed guidance for companies to report on climate-related risks and opportunities that could reasonably be expected to affect their financial performance or enterprise value. The standard builds on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and is designed to be used alongside IFRS S1, which sets out general sustainability disclosure requirements.
Under IFRS S2, companies are expected to disclose how climate-related risks and opportunities are integrated into their governance, strategy, risk management, and metrics and targets. This includes information about physical risks such as extreme weather events, and transition risks such as regulatory changes or shifts in market preferences. Companies must also report on their greenhouse gas emissions, including Scope 1, Scope 2, and Scope 3 where applicable, and explain how they are managing their emissions and aligning with climate goals.
The standard encourages companies to use scenario analysis to assess the resilience of their business model under different climate futures, and to disclose any climate-related targets or transition plans. IFRS S2 aims to provide investors with consistent, comparable, and decision-useful information about how climate issues may impact a company’s financial outlook. It is part of the ISSB’s effort to create a global baseline for sustainability reporting that can be adopted across jurisdictions and integrated with financial reporting.
How does IFRS S2 compare to TCFD?
IFRS S2 is the climate-related disclosure standard developed by the International Sustainability Standards Board (ISSB), while TCFD refers to the framework created by the Task Force on Climate-related Financial Disclosures. Both aim to improve transparency around climate-related risks and opportunities, but they differ in scope, structure, and regulatory status.
TCFD was launched in 2017 as a voluntary framework and has since become widely adopted by companies and regulators around the world. It is structured around four core pillars: governance, strategy, risk management, and metrics and targets. TCFD encourages companies to disclose how climate risks are integrated into their business and financial planning, including the use of scenario analysis to assess resilience under different climate futures.
In essence, IFRS S2 operationalises the TCFD recommendations into a standardised format suitable for regulatory adoption. While TCFD remains a principles-based framework, IFRS S2 provides a more structured and enforceable approach to climate disclosure. For companies already reporting under TCFD, transitioning to IFRS S2 will involve deeper integration with financial reporting and more rigorous data requirements.
It’s not law, so why get involved?
Sustainability reporting is becoming increasingly important because the expectations placed on companies and organisations are evolving rapidly. Investors, regulators, customers, and employees are demanding greater transparency about how businesses impact the environment, society, and the economy. This shift is driven by growing awareness of climate change, resource scarcity, social inequality, and the need for long term resilience in business models. Reporting is no longer just a compliance exercise, it is a strategic tool that helps organisations understand their risks, communicate their values, and build trust with stakeholders.
Starting now is essential because the regulatory landscape is changing quickly. Frameworks like the EU’s CSRD and ESRS, the UK’s SDS, and global standards from the ISSB are setting new expectations for disclosure, assurance, and integration with financial reporting. Companies that wait risk falling behind, facing reputational damage, losing access to capital, or being excluded from supply chains that require ESG data. Early action allows organisations to build internal capacity, improve data quality, and shape their sustainability narrative proactively rather than reactively.
Moreover, sustainability reporting helps organisations identify inefficiencies, uncover opportunities for innovation, and align with global goals such as the UN Sustainable Development Goals and net-zero commitments. It enables better decision making and future proofs operations against regulatory, market, and environmental disruptions. By starting now, companies can embed sustainability into their strategy, governance, and culture, positioning themselves as leaders in a rapidly changing world.
We already report to another reporting requirement.
Sustainability reporting frameworks like CSRD, ESRS, UK SDS, and ISSB are increasingly being designed to interoperate with existing global standards such as GRI (Global Reporting Initiative), TCFD, and CDP (Carbon Disclosure Project). This convergence is intentional and reflects a broader effort to reduce duplication, simplify compliance, and support consistent, comparable disclosures across jurisdictions.
The EU’s ESRS, developed under the CSRD, explicitly builds on the structure and principles of the GRI Standards, especially in how companies assess and report on impact materiality. EFRAG (European Financial Reporting Advisory Group), and GRI have published joint interoperability guidance confirming that companies already using GRI are partially prepared for ESRS, though ESRS adds financial materiality through its double materiality approach.
Similarly, the ISSB’s IFRS S2 standard for climate-related disclosures is directly based on the TCFD framework, retaining its four pillars—governance, strategy, risk management, and metrics and targets. This means companies already reporting under TCFD will find the transition to IFRS S2 relatively straightforward, though ISSB introduces more prescriptive requirements and links disclosures more tightly to financial reporting.
The UK SDS, currently under consultation, is based on the ISSB standards and aims to align with global best practice while remaining flexible for UK companies. It is expected to complement existing voluntary frameworks like CDP and GRI, and may eventually become mandatory for economically significant UK entities.
In practice, this means that companies already reporting under GRI, TCFD, or CDP are not starting from scratch. Instead, they can build on existing processes and disclosures to meet new regulatory requirements. However, they will need to enhance their reporting to meet the more rigorous, structured, and assured expectations of CSRD, ESRS, and ISSB-aligned standards.
Does that mean that I can forget about measuring my carbon footprint?
Absolutely not. ISO 14064-1, ISO 14068-1, and the GHG Protocol are foundational standards and frameworks for greenhouse gas (GHG) accounting and climate-related disclosures. They complement and underpin many of the newer sustainability reporting requirements like CSRD, ESRS, UK SDS, and ISSB by providing the technical basis for measuring and reporting emissions and climate action.
ISO 14064-1 is an international standard that specifies principles and requirements for quantifying and reporting greenhouse gas emissions and removals at the organisational level. It is widely used for corporate carbon foot printing and forms the basis for verified GHG inventories. Organisations reporting under CSRD or ISSB often use ISO 14064-1 to ensure their emissions data is robust, consistent, and auditable.
ISO 14068-1 is a newer standard focused on climate change mitigation through carbon neutrality claims. It sets out requirements for demonstrating and validating carbon neutrality, including how to account for residual emissions and offsets. This standard is particularly relevant for organisations making carbon-neutral commitments, and it supports credible claims that may be disclosed under frameworks like ESRS or CDP.
The GHG Protocol, developed by the World Resources Institute and the World Business Council for Sustainable Development, is the most widely used global framework for GHG accounting. It includes standards for corporate level reporting (Corporate Standard), project-level accounting, and Scope 3 emissions (Value Chain Standard). The GHG Protocol is referenced by nearly all major reporting frameworks, including CDP, TCFD, ISSB, and ESRS, and serves as the de facto methodology for emissions quantification.
Together, these standards provide the technical backbone for emissions reporting. While CSRD, ESRS, and ISSB set the disclosure requirements, ISO standards and the GHG Protocol guide how the underlying data is calculated and validated. Organisations that already use these standards are well-positioned to meet the more rigorous and structured demands of emerging sustainability regulations.
In summary if you are not reporting on your emissions to one of the above standards then the rest is going to be very difficult indeed, you need to start somewhere and grow into this, it is not going away as much as some politicians would like to think, it’s here, its staying, and it needs to be implemented.
