We inform you in detail about the new “Voluntary Sustainability Reporting Standard” (VSME) for SMEs and on the topic of climate management (background, digitalisation as the key, which cost-effective solution is available). Before that, there are brief updates on the EUDR “Deforestation Regulation”, the Supply Chain Sustainability Obligations Act (LkSG), the Single-Use Plastics Fund and the omnibus procedure for CSRD and CSDDD.
News on the EU Deforestation Regulation
There are news about the categorisation of countries into risk categories, one of the missing important foundations for setting up the EUDR risk assessment in the company. On 20 May 2025, the EU published the draft risk classification for the growing countries. According to it, only four countries are categorised as being at high risk of deforestation: Belarus, North Korea, Myanmar and Russia. All countries within the EU are categorised as low risk. The use of wood fibres from these countries is therefore only subject to a greatly reduced due diligence obligation. In the annex you will find the country classification in high and low – all countries that are not mentioned are classified as standard.
The assessment is part of the implementation of the EU Deforestation Regulation (EUDR), which categorises countries according to high, medium or low risk. The category determines how strict the due diligence obligations are for companies that import important agricultural and food commodities such as cocoa, coffee, soya, palm oil, beef and timber.
The EU has also adopted important simplifications, which were published in April.
It’s high time to prepare!
News on the LkSG
The reporting obligation under the Supply Chain Due Diligence Act (LkSG) has been temporarily suspended until 31 December 2025.
Companies can therefore submit reports without penalty until 31 December 2025. Only then will the Federal Office of Economics and Export Control (BAFA) issue a warning for missing or late submission and publication.
The other due diligence obligations of the LkSG and their review and sanctioning by the BAFA remain unaffected by the new deadline regulation. Accordingly, companies are still required to regularly document their due diligence obligations and ensure compliance with them. Ongoing monitoring by the BAFA can still lead to sanctions if violations are detected.
Chancellor Merz has announced that the LkSG will be completely cancelled.
News about the disposable plastic fund (no joke)
If you want to laugh at the absurdities of regulation after a long day (albeit sarcastically), then you should take a look at the UBA’s general rulings on the categorisation of products under the EWKFondsG…
The last trick: The double pack of 2x250g pretzel sticks falls under the EWKFondsG. The reason? Pretzel sticks are a “take-away meal” – because they can theoretically be eaten on the go. But the carton blanks for milk packaging are also covered. You can find the entire cabinet of general rulings here.
In addition, the obligation to report to the fund has just been extended until 15 June – which will not help either, as many micro-enterprises (snack bars, cafés, bakeries, etc.) are not even aware that this reporting obligation exists for them. Along with the postponement of the reporting obligation, the audit obligation for reporting for the year 2025 has also been suspended.
The Central Agency Packaging Register (ZSVR) is unmistakably clear on at least one point: just because manufacturers of certain single-use plastic products participate in the Federal Environment Agency’s DIVID single-use plastic fund, they are not allowed to opt out of the dual system. Apparently, several manufacturers now no longer want to register plastic packaging with dual systems because they pay the single-use plastic levy to the Single-Use Plastic Fund for the same packaging.
CSRD/CSDDD: News on the omnibus procedure
On 3 April 2025, the European Parliament approved the postponement of the application of the legislation on CSRD (Corporate Sustainability Reporting Directive), and due diligence obligations as proposed by the EU Commission as part of the first EU omnibus package.
- The first-time application of the Sustainability Reporting Directive is to be postponed by two years for the second and third wave of companies (“stop-the-clock”).
It was also agreed that the member states do not have to implement the new due diligence obligations from the CSDDD (Corporate Sustainability Due Diligence Directive) until 26 July 2027 and that the largest companies will therefore have one year more time to implement the due diligence obligations (July 2028).
The European Council had already spoken out in favour of the EU Commission’s legislative proposal on 26 March 2025.
Next steps
The proposal still needs to be formally approved by the European Council before it can enter into force. For the regulations to have direct legal effect for companies, the amendments to the directive and the regulations of the CSRD and CSDDD must first be transposed into national law by the member states, if this has not already been done.
Who is affected by the shift: employees and sales
As far as raising employee limits is concerned, a whole range of possibilities is being discussed. There is also still no agreement on turnover.
- Category Number of employees
- 250 (current CSRD)
- 500 (scenario with reduced scope of application; ECB and Italy proposal)
- 1000 (Commission draft and Council working document)
- 3000 (apparently chairman of the working group of the Legal Affairs Committee JURI; not officially confirmed)
- Sales category
-
- 50 million (current CSRD, COM draft, working paper of the Council of the European Union)
- 450 million (proposal Germany, Czech Republic)
- Fundamentally
- Large companies subject to CSRD should only require SMEs and medium-sized companies with up to 500 employees to provide information that complies with the voluntary CSRD reporting standard VSME (New Voluntary Sustainability Reporting Standard for SMEs).
Consequences
The shifts and changes within the framework of the omnibus procedure come up against a complex web of parallel projects and regulations. These should be kept in mind when looking for the best way forward for your own company.
- Neither the Draghi Report nor the Letta Report contain a recommendation to exempt large companies (> €50 million and 250 employees) from the CSRD reporting obligation. Both reports refer to the reduction of reporting obligations, particularly for SMEs and small and medium-sized enterprises.
- The EU has committed itself to the UN Sustainable Development Goals (UN SDGs). SDG 12.6 reads: “Encourage companies, in particular large companies, to include information on their sustainability in their reporting”.
- The EU has drawn up the Sustainable Finance Action Plan (SFAP). If the CSRD thresholds were raised (at least significantly), this plan would be a complete failure because there would then be far too little ESG data available to implement it. The EU Taxonomy Regulation and the SFDR would therefore no longer be necessary.
- Raising the CSRD thresholds (at least significantly) would destroy the important SFAP pillar of the Green Deal architecture.
- The EFRAG (European Financial Reporting Advisory Group) has already started to simplify Set 1 of the ESRS (European Sustainability Reporting Standards). EFRAG’s task is to make the ESRS more proportionate and more targeted. Which target group is EFRAG focussing on when interpreting the criteria “proportionate” and “targeted”? An ESRS that is suitable for companies with > 3000 employees and > EUR 450 million would not be suitable for companies with > 500 employees and > EUR 50 million. Should we not first define the future CSRD target group and then ask EFRAG to adapt the ESRS for this target group?
- If the number of companies subject to reporting requirements is reduced by 80 per cent, the ESRS will lose their relevance. The majority of the remaining 20 per cent will apply the ISSB (International Sustainability Standards Board) standards in future. China and the United Kingdom are currently working on their own sustainability standards based on the ISSB.
Conclusion and recommendation
From BP’s point of view, it makes economic sense for every company to deal with the opportunities and risks that are hidden under the generic term ESG.
- Climate change, supply chain risk, skills shortages, digitalisation, new climate-friendly products and the circular economy are issues that are not going to go away (whether you like it or not).
- Banks will ask for transparent KPIs and customers for comprehensible targets and product carbon footprints.
- EcoVadis demands many points that are also queried by the CSRD – materiality analysis, GHG inventory, climate targets and so on.
Politics is increasingly taking place in the rhythm of the legislature. This is not an option for a sustainable company. Companies should think more long-term.
We are happy to help you find customised solutions for sustainability reporting that best suit your wishes and needs. Pragmatic and efficient.
