The EU’s Corporate Sustainability Reporting Directive (CSRD) aims to revolutionize corporate reporting via the transparent environmental, social, and governance (ESG) reporting of key performance indicators (KPIs), strategies, and monitoring. The CSRD’s impact has been substantial, with around two-thirds of EMEA companies reporting in accordance with the 2028 compliance deadline.
CSRD reporting standards — including more than 1,000 data points consolidated for certain industries — has elevated ESG data architectures to a new high and become an unspoken benchmark for ESG reporting globally.
Omnibus Simplification Package Creates Regulatory Uncertainty
In February 2025, the EU’s Omnibus Simplification Package was introduced, driven by the EU Competitiveness Compass, which aims to simplify sustainability reporting and reduce the administrative burdens on business and promote competitiveness. It presents far-reaching changes to the CSRD and other EU ESG regulations (e.g., the EU taxonomy, CSDDD, and CBAM). Key elements of the proposal include:
- The number of companies mandated to report is reduced by 80% by increasing company size to >1,000 employees.
- Small and medium-sized businesses are exempt from reporting but can adopt voluntary reporting standards (VSME).
- Within the ESRS, fewer and more simplified datapoints (KPIs) have to be reported and some will become voluntary.
- There will be no (mandatory) sector-specific ESRSs.
- Implementation of CSRD for the second wave of companies (large EU-based companies) is postponed for two years.
- The requirement for reasonable assurance is removed (only limited assurance required).
The proposal is under debate in the European Parliament and the European Council. A finalization — and thereby clarity for businesses — cannot be expected for several months.
At the same time, banks and other investors still require sustainability metrics for lending decisions and/or fund allocation to achieve their ESG targets and risk management. Consequently, even companies potentially now exempt from CSRD will face indirect ESG disclosure pressure, leading to a two-tier ESG reporting ecosystem: those who report for compliance and those who report for investors.
Finally, there is a small but growing number of companies that actually perceive sustainability (and ESG reporting) as a benefit, potential business growth driver and, thus, competitive advantage.
CSRD Maturity is Still Limited in EMEA
Our new research on the CSRD readiness of European businesses has shown that ESG regulation (and CSRD in particular) is still often perceived as a cost burden, as it requires additional resources, new skills, changes in data architecture and management, new technologies to be implemented — and a new level of collaboration across silos within the business and partner ecosystem.
