With Omnibus I now in force, the European Union has significantly narrowed the scope of mandatory sustainability reporting. Nevertheless, fewer regulatory obligations do not make ESG information any less important for business decision-making, risk management or relationships with international partners.

For companies in North Macedonia, this raises an important question: how can they develop an appropriate approach to sustainability reporting, even when they are not directly subject to a legal reporting obligation?

What is ESG reporting?

Sustainability reporting involves the structured disclosure of information about a company's impact on the environment and society, as well as sustainability-related risks and opportunities that may affect its operations.

ESG encompasses three key areas:

  • Environmental: climate change, use of natural resources, pollution, emissions and waste management.
  • Social: working conditions, human capital, equal opportunities, inclusion and community relations.
  • Governance: risk management, business ethics, transparency and corporate governance structures.

Sustainability reporting has traditionally been based on voluntary frameworks such as GRI and SASB. The introduction of the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) made reporting mandatory for certain categories of companies in the European Union.

An important principle within the European regulatory framework is double materiality. This requires companies to consider two perspectives: how their operations affect people and the environment, and how sustainability-related matters affect their financial position, performance and business prospects.

What is Omnibus and why was it introduced?

The implementation of CSRD and ESRS demonstrated that establishing comprehensive reporting systems can present significant administrative and financial challenges.

For many companies, particularly those with limited human and technical resources, collecting, processing and verifying ESG data requires additional investment, expertise and organisational changes.

In response to these challenges, the European Commission presented the Omnibus Simplification Package on 26 February 2025.

The term “Omnibus” refers to a legislative approach that introduces amendments to several existing legal acts through a single package.

The proposed changes covered several areas, including:

  • The Corporate Sustainability Reporting Directive (CSRD).
  • The Corporate Sustainability Due Diligence Directive (CSDDD).
  • The EU Taxonomy.
  • The Carbon Border Adjustment Mechanism (CBAM).

The main objective was to reduce administrative burdens and simplify regulatory requirements while maintaining sustainability-related objectives.

What changed under Omnibus I?

On 18 March 2026, Directive (EU) 2026/470, known as Omnibus I, entered into force, introducing significant amendments to European sustainability reporting and corporate due diligence rules.

One of the most important changes is the substantial reduction in the number of companies falling within the scope of CSRD.

Under the revised criteria, mandatory reporting applies to companies that meet both of the following conditions:

  • More than 1,000 employees on average during the financial year.
  • Annual net turnover exceeding EUR 450 million.

Separate criteria apply to certain non-EU companies, based on turnover generated within the European Union and their presence through a subsidiary or branch.

The amendments also affect CSDDD, restricting its scope to very large companies with more than 5,000 employees and worldwide net turnover exceeding EUR 1.5 billion, in accordance with the applicable provisions.

These changes represent a significant narrowing of the regulatory scope compared with the original framework.

It is important to distinguish between the date on which the directive entered into force and the application of its provisions through national legislation in EU Member States. Specific obligations must therefore be assessed in light of the applicable deadlines and national rules.

ESG remains relevant beyond legal requirements

Although Omnibus I reduces the number of companies directly subject to CSRD, this does not mean that the business need for ESG information has disappeared.

Banks, investors, customers and international business partners may continue to request information on how companies manage sustainability-related risks.

Furthermore, other European regulations, including CBAM and rules concerning batteries, packaging and product ecodesign, may impose separate requirements on certain sectors and business activities.

Compliance with CSRD should therefore not be equated with the broader management of ESG matters.

What do these changes mean for companies in North Macedonia?

For most companies in North Macedonia, direct exposure to CSRD reporting obligations may be limited. However, they may still be affected indirectly.

This is particularly relevant for companies that:

  • Form part of international supply chains.
  • Work with European corporate groups.
  • Export products and services to EU markets.
  • Obtain or seek financing from banks and international financial institutions.
  • Receive requests for ESG data from their business partners.

For example, a manufacturing company in North Macedonia supplying components to a European customer may be asked to provide information on energy consumption, greenhouse gas emissions or working conditions.

Such requests may arise from the customer's supplier assessment and risk management processes, even where the Macedonian company is not directly required to report under CSRD.

Understanding ESG requirements is therefore important not only for regulatory compliance, but also for maintaining business relationships, remaining competitive and accessing finance.

From regulatory compliance to a strategic approach

In the RSM Netherlands analysis, “CSRD is off the table (for now), but what about ESG for SMEs?”, authors Gidion Lont, Iman Zalinyan and Mario van den Broek examine the importance of ESG for companies operating in a changing regulatory environment.

Published in 2025, when the amendments were still at the proposal stage, the analysis emphasises that ESG reporting should be viewed as part of broader business management rather than simply an administrative obligation.

In this context, three practical steps are highlighted.

1. Assess ESG maturity

The first step is to assess the company's current position.

This assessment should cover governance, business strategy, risk management processes, data availability, reporting practices and stakeholder communication.

The aim is to identify existing capabilities and areas where improvements are needed.

2. Define the company's ESG profile

Companies do not all face the same requirements and risks.

It is therefore important to consider the company's size, industry, geographical presence, financial position, regulatory exposure, supply chain and customer requirements.

This helps determine which ESG information is most relevant to the company's operations.

3. Establish an appropriate reporting infrastructure

Based on this assessment, the company can select a suitable reporting framework and establish processes for collecting, verifying and managing data.

Depending on its needs and obligations, frameworks such as ESRS, VSME, GRI or ISSB standards may be considered.

On 3 July 2026, the European Commission also published revised European sustainability reporting standards, as well as a voluntary standard for smaller companies, aimed at simplifying reporting and reducing administrative burdens.

When selecting a framework, it is important to consider its applicability, the company's business needs and its organisational capacity.

ESG reporting in the domestic market

A survey conducted in 2024 among companies in the southeastern region of North Macedonia highlighted challenges relating to awareness and the adoption of ESG reporting.

Of the 19 responses received:

  • 57.9% of respondents were not familiar with ESG reporting.
  • 89.5% stated that they did not apply ESG reporting.
  • 63.2% identified a lack of knowledge and expertise as the main challenge.

Given the limited number of responses, the findings cannot be considered representative of the entire domestic market.

Nevertheless, they highlight the need for greater awareness, knowledge development and practical support for companies beginning to address ESG matters.

Practical recommendations for companies

Preparing for ESG reporting does not necessarily need to begin with an extensive report or a complex information system.

The starting point is to understand the organisation's needs and existing capabilities.

Companies can take several practical steps:

Assess regulatory exposure

Identify direct legal obligations, as well as potential requirements from business partners, financial institutions and international corporate groups.

Evaluate existing ESG maturity

Review the company's policies, procedures, available data and reporting capabilities.

Identify material sustainability matters

Determine the most significant sustainability-related impacts, risks and opportunities, taking into account the company's activities and business model.

Select an appropriate reporting framework

The choice of framework should reflect legal obligations, company size and the needs of those using the information.

Establish data controls

The reliability and consistency of ESG data depend on clearly defined responsibilities, appropriate procedures and integration with existing financial and operational processes.

By following this approach, companies can gradually develop an ESG reporting system that meets their actual needs.

Conclusion

Omnibus I marks a significant change in the European regulatory framework for sustainability reporting. By narrowing the scope of mandatory reporting, it changes the legal obligations of a large number of companies. However, ESG matters remain relevant to business operations.

For companies in North Macedonia, particularly those involved in international supply chains or working with European partners, it is important to assess their exposure to ESG requirements in a timely manner.

The approach adopted should be proportionate to the company's size, activities, resources and needs.

The value of ESG reporting lies not only in meeting reporting requirements, but also in using relevant and reliable information to improve risk management and support informed business decisions.

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Author:

Стојан Стојанов
Tax Associate
Main office