At the end of last month [February 2025], the European Commission announced significant changes to sustainability reporting regulations as part of its Omnibus package. The aim of these revisions is to reduce administrative burdens for businesses. While these updates streamline compliance for many companies, they also introduce new challenges and uncertainties. Concerns have emerged, particularly from environmental advocates and businesses that have already invested heavily in compliance, as these changes could lead to weakened sustainability commitments at an EU-wide level.
Although nothing is 100% final yet, let’s explore how these revisions might impact the work companies are already doing regarding their climate and environmental objectives.
Key Changes:
- Reporting scope significantly reduced: The number of companies required to report under the Corporate Sustainability Reporting Directive (CSRD) will drop from 50,000 to fewer than 7,000, drastically reducing corporate transparency obligations.
- Supply chain due diligence scaled back: Only direct suppliers will need to undergo sustainability assessments, eliminating compliance obligations for indirect suppliers, which could weaken accountability across supply chains.
- Sector-specific reporting delayed or eliminated: Companies in industries with high environmental impacts (e.g., oil & gas, fashion, and agriculture) may no longer be required to report under specific frameworks designed to ensure transparency.
- Non-compliance penalties removed: Previously, companies faced fines of up to 5% of turnover for failing to meet sustainability reporting obligations. Under the proposed changes, this financial risk is eliminated.
Detailed Updates:
CSRD (Corporate Sustainability Reporting Directive)
- The threshold for mandatory reporting increases to companies with more than 1,000 employees and a €450M+ turnover, exempting many mid-sized businesses.
- No requirement to collect sustainability data from non-CSRD suppliers, reducing the supply chain reporting burden but potentially limiting full lifecycle emissions tracking.
- Sector-specific sustainability standards might be removed, making it harder to compare sustainability performance across industries.
- Reporting deadlines could be delayed by up to two years, slowing down transparency efforts.
CSDDD (Corporate Sustainability Due Diligence Directive)
- Due diligence applies only to direct suppliers, significantly reducing monitoring obligations across multi-tier supply chains.
- Sustainability risk assessments will be conducted every five years instead of on a continuous basis, lowering oversight and accountability.
- Contract termination for non-compliance is no longer mandatory, which may reduce pressure on suppliers to improve sustainability practices.
- Elimination of financial penalties and civil liability, reducing legal risks for businesses but potentially weakening enforcement.
EU Taxonomy
- Moves towards voluntary reporting, potentially undermining the “Do No Significant Harm” principle, which ensures investments align with sustainability goals.
- This shift could weaken investor confidence in green finance and reduce incentives for businesses to align with sustainable economic activities.
What Stays the Same:
Despite these changes, several key sustainability principles remain intact:
- EU climate targets remain unchanged, meaning businesses will still be expected to align with long-term decarbonisation goals.
- Large companies are still required to disclose climate and environmental data, ensuring some level of transparency.
- Sustainability leadership remains a competitive advantage, as consumer, investor, and regulatory expectations continue to favour ESG-focused companies.
- Decarbonisation remains essential, especially as the EU moves toward its 2050 net-zero targets.
What This Means for Businesses
While these revisions may simplify compliance for some companies, they also risk lowering sustainability ambition across the corporate landscape. Companies that have already invested in robust ESG strategies may see reduced incentives for maintaining high levels of transparency, while investors and stakeholders may struggle with reduced comparability across industries.
With sustainability regulation evolving, businesses should consider staying ahead of compliance requirements by maintaining strong ESG practices voluntarily. Those that continue prioritising sustainability will likely retain a competitive edge in securing green finance, meeting stakeholder expectations, and adapting to future regulatory shifts.
Want to Know How These New Reporting Requirements Will Effect You ?
Click the button below to find out:
- What is CSRD ?
- Who needs to comply ?
- What the new sustainability reporting regulations means for you ?
Alternatively why not come visit us at the 
in the RDS on March 26th and 27th – Stand 65 ! We can walk you through all the changes face-to-face as our very own ESG & Sustainability Reporting Lead, Kayleigh-Ann Myles, will be there in person.
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