Corporate Sustainability Reporting Directive: proposed amendments exclude special purpose vehicles from scope

As highlighted in the European Commission's Working Plan for 2025, the European Commission intends to simplify many areas of EU regulation in the coming years to make the EU more competitive.

The first package of simplification proposals (the Omnibus Package) was published on 26 February and contains proposed amendments to the Corporate Sustainability Reporting Directive (CSRD) which are particularly significant for special purpose vehicles (SPVs).

Proposed amendments to reporting thresholds

Currently, an SPV will be in scope for CSRD reporting where it exceeds at least two of the following three thresholds:

• net turnover of €50 million

• a balance sheet total of €25 million

• an average of 250 employees during the financial

The Omnibus Package proposes to amend the thresholds so that only undertakings or groups that have:

• either (i) net turnover greater than €50m or (ii) a balance sheet total greater than €25m

• more than 1,000 employees

These groups will be subject to mandatory reporting obligations.

As SPVs generally have no employees, this should remove SPVs from the scope of CSRD reporting entirely. Listed small and medium enterprises (SMEs) will also be excluded.

Postponement of existing reporting requirements

The reporting requirements for companies, currently in scope of the CSRD, which are required to report in respect of their 2025 or 2026 financial years will be postponed in doing so by two years, to 2027 and 2028 respectively. This means any SPVs that were considering whether they were in scope for 2025 non-financial information should have an additional two years to prepare, at which stage they should hopefully be out of scope under the Omnibus Package.

The European Commission has requested that the European Parliament and the Council of Europe prioritise the implementation of the proposal, this will postpone reporting for the 2025 financial year while the other amendments in the Omnibus Package are being considered. This is to avoid companies having to commence reporting for financial year 2025 when they will ultimately be exempt from reporting if the Omnibus Package as proposed is passed.

Timing of amendments

The Omnibus Package will now be submitted to the European Parliament and the Council for their consideration and adoption. The timing for passage of the amendments is unclear as the European co-legislators need to agree the text and then the proposals need to be published in the EU's official journal and, where relevant, implemented by national governments.

In the past, there have been similar proposals to change the scope of EU regulatory reporting requirements during the phase-in of such reporting requirements.  In those cases, European regulators published letters addressed to national competent authorities asking them not to prioritise enforcement of the existing requirements while the amendments were awaiting implementation. It is not clear if a similar approach will be adopted for CSRD, but this would seem to be sensible.

Conclusion

There had been ongoing discussions within industry as to how an SPV could comply with CSRD, and concerns over the additional costs that could be introduced into SPV structures where CSRD reporting is required. The amendments proposed by the European Commission recognise that the costs and regulatory burdens imposed by CSRD should be targeted, which is a welcome development.

How Ogier can help

Ireland's Banking & Finance and Ogier Global teams can provide expert guidance on the proposed amendments to the Corporate Sustainability Reporting Directive and how the exclusion of special purpose vehicles from the scope could impact your business operations. For tailored advice, please refer to the contact information below.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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