Are We Doomed?

An overview of the impacts of the regulatory whiplash in the form of the EU Omnibus Package

On the 26^th of February 2025, the European Commission unveiled its highly anticipated Omnibus package; a supposed simplification of EU sustainability regulations, primarily involving major amendments to the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive, among others. The goal? Reduce compliance costs by at least 25% while keeping the Green Deal dream alive.

At the time, the excitement around its potential was well justified. Extending deadlines would give companies more time to navigate the complexities of the reporting requirements (of which there are many), while streamlining overlapping reporting requirements could create a more cohesive system. Reducing the exorbitant number of required data points would also ease the reporting burden, which was a welcomed update. However, in classic EU fashion, this „simplification“ has actually made things a whole lot messier. Instead of simplification of EU sustainability regulations, let’s call it what it really is: major deregulation. Companies are now stuck in a regulatory limbo, trying to figure out whether to stop reporting, keep reporting, or just give up and move to a cabin in the woods.

So, what are the actual changes?

Here’s what’s on the table:

• Who’s in, who’s out: The scope of CSRD has been massively reduced. Originally, any “large” company meeting two of three criteria (≥250 employees, ≥€50m turnover, ≥€25m assets) was in. Now? Only companies with >1000 employees and either >€50m turnover or >€25m assets need to comply. That means around 80% of previously in-scope companies are suddenly excluded from this mandatory reporting directive.
• Deadlines pushed back: The phased reporting rollout was supposed to start this year, 2025, with waves following in 2026 and 2027. Now, waves 2 and 3 have been delayed by two years, meaning those companies that still fall within scope of the directive won’t have to report until 2028. But those already in Wave 1? No such luck.
• Lighter reporting burden: The number of data points required under the European Sustainability Reporting Standards (ESRS) has also been reduced. And sector-specific ESRS? Scrapped. EU Taxonomy alignment? Only mandatory for companies with >1000 employees and turnover >€450m.
• Weakened value chain accountability: One of CSRD’s biggest levers for impact was its requirement for companies to gather sustainability data across their value chains, putting pressure on smaller suppliers to improve or risk exclusion. The Omnibus package shifts this approach, aiming to “ensure that sustainability reporting requirements on large companies do not burden smaller companies in their value chains.” The result? Significantly less pressure on value chain partners, weakening CSRD’s potential to drive sustainability improvements beyond direct compliance.
• Scrapped upgrade to reasonable assurance: The requirement to eventually move from limited assurance to reasonable assurance has also been removed entirely. While framed as a cost-saving measure, this eliminates the possibility of stricter verification standards in the future, further weakening the credibility and reliability of sustainability disclosures.

Do you need to stop reporting?

Short answer: No. Long answer: Still no, but with extra frustration.

The European Commission may have dangled a tempting “two-year delay” in front of companies, but truth is, we don’t know if the proposal will be accepted in the first place, and if it is, the timeline for approval and implementation could take months. On top of this, the CSRD has already been transposed into national legislation in many countries, making compliance mandatory regardless of potential EU-level delays. Notably, as of January 2025, fewer than 10 EU Member States have yet to transpose the CSRD into their national laws, meaning ceasing reporting based on anticipated delays could lead to non-compliance with national laws, exposing companies to legal risks and penalties.

As a result, you have two choices:

1. Stop reporting
2. Continue reporting

But there are some important caveats. Stopping reporting now means betting on the Omnibus proposal being approved and swiftly transposed into national legislation within the next few months, a challenging feat for the EU, but not an impossible one. On the other hand, if you continue reporting only to later discover that you are no longer in scope, your deadline has been postponed, or the CSRD has been significantly weakened, you risk having invested considerable time, effort, and resources unnecessarily.

Either way, relying too much on political promises puts you in a precarious situation. Instead of pausing, now is the time to take a truly strategic approach to compliance. One that will serve you in the long run and aligns with the very purpose of the CSRD in the first place.

Amongst the chaos, are there any benefits?

Yes, but it depends on who you are.

• If you have <1000 employees, you might be off the hook! So for now, enjoy the breather, but remember this is just a proposal, and the final scope is still up for debate. Additionally, you may want to dial down a bit, but as we will point out in a minute, you may not want to scrap your commitments entirely.
• If you’re a sustainability-focused business, you now have more time to get your reporting ducks in a row.
• If you’re an investor or consumer brand, nothing really changes. Sustainable investment and consumer demand for ESG transparency remain strong, so dropping reporting could backfire.

What should my next steps be?

Our advice? Play it safe and take the middle path. Rather than gamble on regulatory uncertainty, take control of your sustainability strategy. Scrapping your sustainability reporting entirely is far too risky, not just from a regulatory standpoint, but possibly even more so in terms of long-term business value.

Sustainability reporting isn’t just a regulatory burden, it’s an opportunity to unlock tangible business value and strengthen risk management. By gathering and analysing ESG data, companies gain deeper insights into operational inefficiencies, resource consumption, and potential vulnerabilities across their supply chains. This information can lead to cost-saving measures, such as optimising energy use, reducing unnecessary waste, and identifying more sustainable procurement options.

Moreover, studies consistently show that younger generations, particularly Gen Z and Millennials, are willing to spend more on sustainable products and services. In fact, the World Economic Forum highlights that these consumers actively seek out businesses that align with their environmental and social values.

Beyond consumer demand, investors, customers, and business partners are increasingly prioritising companies with strong ESG commitments. Businesses that delay or weaken their sustainability strategies risk falling behind in an economy where transparency and accountability are becoming the norm.

Financial institutions and insurers, for example, are integrating sustainability ratings into their risk assessments, with higher ESG performance often linked to better financing terms and lower insurance costs. Companies that demonstrate a clear commitment to sustainability are likely to benefit from these evolving financial incentives.

These external pressures existed well before the introduction of the CSRD, and they won’t disappear just because mandatory reporting requirements might change.

So what will this look like in practice?

• Set a strong foundation with a Double Materiality Assessment (DMA): If you haven’t done this yet, do it now. Even if regulations shift, understanding your impacts and risks will be valuable to your organisation.

• Ensure robust data collection processes: Reliable sustainability reporting starts with good data. Identify gaps in your data collection and improve tracking to avoid scrambling if the proposal does not pass.
• Identify weaknesses and take action: Beyond compliance, sustainability is about real impact. Find out where your company is falling short, whether in emissions, supply chain transparency, or energy sourcing, and develop a strategy to improve.
• Reduce emissions, because the earth is struggling: Regulations aside, decarbonisation should be a business priority. The transition to renewable energy and energy efficiency improvements not only future proof your company but also lower long-term costs.
• Stay ahead of market expectations: Even if regulatory timelines shift, stakeholders; customers, investors, and partners, are still watching. Weakening sustainability commitments could cost you more in lost trust than compliance ever would.

Final thoughts

The EU Commission’s attempt to “simplify” CSRD is well-intentioned but ultimately misleading. Instead of providing immediate relief, it has created uncertainty and legal risk. Companies must stay proactive, keep their sustainability strategies in place, and prepare for multiple possible outcomes.

If you were hoping to toss your CSRD plans into the shredder, the general consensus seems to be that you’re better off playing the long game. This is still a major shift in corporate sustainability, and being prepared will always be the safest bet. And if the goal of the EU Commission is to strike a balance between easing the burden on businesses and keeping the Green Deal on track, then cutting compliance and excluding 40,000+ companies from reporting is a strange way to do it. Because let’s be honest, deregulation alone won’t keep the Green Deal dream alive.

So, rather than taking an all-or-nothing approach, strike a balance. Continue (or start, if you haven’t already) reporting, focusing on the areas that matter most to your organisation. Following this, refine your strategy, use this time to strengthen your ESG framework, and start making real change where you can.

If the Omnibus proposal does not go through, maintaining your ESG efforts now will put you in a strong position to ramp up your reporting processes efficiently, making compliance far easier than starting from scratch. On the other hand, if the proposal is approved, you’ll still benefit from a clearer understanding of your sustainability performance and compliance needs, without having had to overcommit resources in the meantime.

Either way, the direction of travel is clear: corporate sustainability expectations aren’t disappearing. Companies that use this period wisely will be in the best position to adapt, comply, and ultimately, stay ahead.

Whether you need guidance on navigating the Omnibus Proposal, maintaining compliance, or leveraging sustainability reporting to drive real business value, Nvalue is here to support. Get in touch to ensure your sustainability strategy remains strong, no matter how the regulatory landscape shifts.