While the European Union has taken a leading role in sustainability reporting through the Corporate Sustainability Reporting Directive (CSRD), recent “simplification” efforts, such as the proposed Omnibus Directive, risk undermining the very goals of competitiveness and long-term corporate resilience.
These changes could represent a worrying step backwards, threatening not only Europe’s leadership position but also companies’ ability to thrive in a future increasingly shaped by climate and nature-related risks, write Sylvie Goulard and Aure Keraron in a policy brief intended to inform the discussion at the conference Sustainability disclosure: red tape or strategic tool for the future of business? (SDA Bocconi School of Management, June 24, in collaboration with the Institute for European Policymaking@Bocconi University – IEP@BU).
If the drive for simplification conceals a desire to avoid transparency, it could have counterproductive consequences for European businesses.
The context
The European Union aimed to lead a global movement to produce reliable environmental data, spurred by the 2015 Paris Agreement. Initiatives like the Task Force on Climate-related Financial Disclosures (TCFD) and the International Sustainability Standards Board (ISSB) laid the groundwork for voluntary, standardized reporting on a global scale.
In the European context, Commission President Ursula von der Leyen announced the European Green Deal in 2019, which included the CSRD, adopted in December 2022. The CSRD was designed as a “cornerstone” of a broader sustainability disclosure framework, making reporting mandatory for most companies and introducing audit requirements to ensure data reliability.
The goal was to help companies integrate sustainability into their long-term strategies, inform investors, and avoid “greenwashing.”
However, at the beginning of her second term (2024), von der Leyen announced a sweeping simplification of the regulatory framework with the Omnibus Directive proposal, presented in February 2025. This initiative aims to reduce the number of companies subject to the CSRD and to weaken its requirements, at a time when scientists are warning that climate change and environmental degradation are accelerating.
But why was the CSRD originally designed the way it was? And what risks does the Omnibus proposal entail? The policy brief aims to help strike a balance in a debate that is often “superficial and ideological.”
The research
The policy brief offers an in-depth analysis and critical synthesis of policies and arguments surrounding sustainability reporting in the EU.
Goulard and Keraron examined and cross-referenced a wide range of sources, including EU legislative documents, views of key institutions, international reports and initiatives, academic studies and empirical evidence, and political statements.
The Omnibus proposal would reduce by 80% the number of companies subject to the CSRD, limiting reporting obligations to firms with more than 1,000 employees and annual revenue exceeding €50 million or a balance sheet total over €25 million. This would make the CSRD’s scope even narrower than the 2014 Non-Financial Reporting Directive, which applied to companies with over 500 employees. The review and simplification of the European Sustainability Reporting Standards (ESRS) aim for a 70% reduction in required data points, and the proposal includes a two-year delay in reporting obligations for large companies and listed SMEs (“stop-the-clock”). For SMEs, the new framework would be voluntary, and sector-specific reporting requirements would be eliminated.
Conclusions and takeaways
As originally adopted, the CSRD was viewed as a forward-looking, strategic policy that could strengthen European competitiveness, promote innovation, and protect value chains. The Omnibus proposal, by contrast, clearly represents a step backward that drastically simplifies sustainability requirements without attempting improvements in other areas.
The proposal is out of step with the accelerating pace of climate change and environmental decline, as underscored by science. Relying on verified and comprehensible data is essential to tackle systemic, human-driven challenges. The authors suggest that the push for simplification may in fact be a way to avoid transparency and disclosure, allowing companies to continue short-term profit-making without accounting for the negative externalities of their activities. Shrinking the CSRD’s scope—especially for SMEs—could undermine large companies’ ability to collect necessary data from their supply chains, and hamper financial institutions' ability to assess climate and biodiversity-related risks in their portfolios.
Finally, the proposed changes could lead to the fragmentation of the EU single market. Differentiating threshold requirements based on company size may create disparities among member states with different industrial structures. Delaying environmental protection efforts will not make the EU more competitive; on the contrary, it may increase future costs for mitigation and adaptation.
Sylvie Goulard, Aure Keraron, Green disclosure: red tape or strategic tool? IEP@BU Policy Briefs Series.
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