The European Commission has introduced a series of proposed amendments to the sustainability reporting regulations that companies are mandated to follow.
As part of its comprehensive Omnibus proposal, the Commission, which functions as the executive arm of the European Union, intends to narrow the scope of reporting obligations to encompass only those businesses with more than 1,000 employees and annual revenues surpassing €50 million ($52 million). This adjustment is projected to exempt approximately 80% of businesses from the directive.
Commission President Ursula von der Leyen characterized these proposals as a “far-reaching simplification” aimed at easing the operational burden on businesses across the EU.
However, these proposed changes have drawn criticism from various advocacy groups and campaign circles.
The amendments specifically target key regulatory frameworks, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy. The Commission asserts that these changes will reduce the complexity of EU regulations for all businesses, particularly benefiting small and medium-sized enterprises (SMEs) and small mid-cap companies.
Rather than maintaining a broad regulatory framework, the proposed rules will concentrate oversight on the “largest companies,” which are deemed to have the most significant impact on environmental and climate issues. In addition, the Commission has suggested deferring reporting requirements by two years for companies initially scheduled to comply this year or the next.
According to estimates from the Commission, these revisions could lead to a reduction of around €6.3 billion in annual administrative costs and potentially mobilize an additional €50 billion in public and private investment to support key policy priorities.
It is important to note that these proposed changes require approval from the European Parliament before they can take effect.
While many businesses may welcome the prospect of reduced regulatory burdens, the World Wide Fund for Nature (WWF) has voiced strong objections to the proposal, labeling it a “devastating blow to EU environmental objectives.”
The WWF has stated that by excluding over 80% of companies from the CSRD framework—rather than implementing a tiered reporting system—the Commission’s proposal risks creating significant data gaps, imposing additional burdens on businesses, and restricting access to sustainable finance. This could ultimately impede economic growth.
Mariana Ferreira, the sustainable finance policy officer at WWF’s European Policy Office, expressed concern that the Commission’s proposal, under the guise of ‘simplification,’ could significantly hamper economic and business success. She warned that this sets a perilous precedent with widespread implications.
Commenting on the situation, Lara Wolters, a member of the European Parliament, stated, “We cannot accept the watering down of sustainability, labor, and human rights standards within the CSDDD and CSRD.” She further emphasized that the new proposals would enable companies to overlook a majority of issues within their supply chains and remove accountability for corporate negligence.
Maria van der Heide, the head of EU policy at the UK-based NGO ShareAction, cautioned that the Commission’s approach risks creating uncertainty, dismantling essential safeguards, and ultimately undermining trust in the EU’s ability to lead on sustainability issues.
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