The European Commission has proposed changes to the sustainability reporting rules companies must follow.
As part of its broader Omnibus proposal, the Commission, the EU’s executive arm, aims to limit reporting requirements to businesses with more than 1,000 employees and revenue exceeding €50m ($52m), exempting about 80% of companies under the directive.
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Commission President Ursula von der Leyen described the proposals as a “far-reaching simplification” that will “make life easier for our businesses”.
The rules have received criticism from campaign circles.
The proposal targets the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy.
According to the Commission, the proposed changes “will reduce [the] complexity of EU requirements for all businesses”, particularly SMEs and small mid-caps business.
Instead, the new rules will refocus the regulatory framework on the “largest companies”, as they are expected to have the greatest impact on the climate and environment.
The Commission has additionally suggested postponing reporting requirements by two years for companies originally set to comply this year or next.
It estimates the changes will save approximately €6.3bn in annual administrative costs and mobilise an additional €50bn in public and private investment to support policy priorities.
These revisions must receive approval from the European Parliament before they can be implemented.
While businesses may welcome the reduced regulatory burden, the World Wide Fund for Nature (WWF) has criticised the proposal, calling it a “devastating blow to EU environmental objectives”.
WWF said by excluding over 80% of companies from the CSRD instead of introducing a scaled reporting system, the Commission’s proposal will create data gaps, add business burdens, and limit access to sustainable finance, ultimately slowing economic growth.
WWF European Policy Office sustainable finance policy officer Mariana Ferreira said: “Under the guise of ‘simplification’, the Commission put forward a proposal that will hinder economic and business success. This sets a dangerous precedent with far-reaching consequences.”
Lara Wolters, a member of the European Parliament, said: “We cannot accept the watering down of sustainability, labour and human rights standards in the CSDDD and CSRD.”
Wolters added the new proposals “would allow companies to ignore the vast majority of problems in their supply chains, and deleted the consequences for corporate negligence”.
Maria van der Heide, head of EU policy at UK NGO ShareAction, the Commission will be “creating uncertainty, dismantling safeguards and undermining trust in the EU’s ability to be a leader in sustainability”.
