The EU has been a forerunner when it comes to sustainability linked regulation, but following the release of the Draghi Report in 2024, in which it was argued that the European block is in desperate need of investment to boost competitivity compared to its global peers, The European commission set out its ‘Simplification Omnibus.’
The measures, partly informed also by pressure from countries such as Denmark, Germany and France, as well as various business groups such as BusinessEurope, are designed to simplify the sustainability reporting requirements for companies to reduce burdens, stoke investment, and promote economic growth. The Omnibus proposal came out officially on the 26th, calling for far-reaching changes to CSRD, CSDDD & the EU Taxonomy.
The Omnibus has not been a straightforward process and there remains much disagreement across the bloc. At the beginning of the year German Chancellor Olaf Scholz, speaking about the EU’s sustainability rules, suggested that "in its current form, the benefits on this directive are not aligned with the bureaucratic effort for the companies."
Conversely, the Ministry of Foreign Affairs of Finland has suggested that firms are not much concerned about over-regulation or lack of competitiveness, but about lack of guidance, conflicting requirements, and many uncertainties, while Spain and Italy also called for the rules not to be watered down, stating that the EU has shown strong leadership in this area and backtracking would lose soft power (Reuters 2025).
Beyond the bloc, especially in the US, new regulatory environments complicate the picture further. The new US Commerce Secretary, Howard Lutnick, raised the extraterritorial effect of the EU’s sustainability rules on US businesses, suggesting they are a “serious concern” that “impose unreasonable burdens on our companies.” (renewablematter.eu).
There is further disagreement and genuine uncertainty on the impact these regulations have on businesses at an operational level, made all the murkier by the fact that they A. haven’t been fully implemented yet and B. there hasn't been enough time to conduct robust analysis on their impacts.
What belies all of this is a changed economic environment. Just a few years ago the EU’s Green transition seemed unstoppable, but inflationary pressures and cost of living concerns have altered the business environment, prompting a change in attitude. The fundamental narrative is one in which reporting requirements are framed as burdens that are stifling economic growth: i.e. costs. Such a conception of a fundamental trade-off misses the point entirely. There are very real economic opportunities that arise from the EU’s sustainability rules: i.e. value creation.
Granted, there are no one-size fits all approaches to how businesses create value from sustainability disclosures and due diligence requirements. Businesses should, like all other matters, take a contextually led approach to discovering how their value chains and sustainability matters intersect, because there are very real ways that value can be created using sustainability data. To do this, firms and financial market actors need access to certifiable, comparable and robust data, but the changes brought forward by the omnibus appear to undermine these needs.
Though EU officials have argued that these measures are designed to help companies and investors implement the rules in the real-world, others, such as the chief sustainable systems officer Nathan Fabian of the Principles for Responsible Investment, have suggested that the proposals will “materially reduce’’ access to the information investors need (IPE 2025).
Sustainability data should be seen just like any other kind of data: as business intelligence. If we agree that sustainability related issues are financially material for businesses - which the Omnibus appears to do by retrenching double materiality as a key concept - then the more data we have, the more informed our decisions can be.
It is not only that businesses can use sustainability data to make more informed decisions, find new markets or innovate new products, but in trying to meet the needs of reporting, new business is created, new knowledge formed, and new innovations found. Over time, the burden of reporting will reduce as firms understand best practices, innovate, and utilise a growing selection of automated tech tools to streamline reporting, acquisition, and analysis. AI is a huge opportunity here.
Undoubtedly these reporting requirements do have tangible impacts on business, but the extent to which they are stifling competitivity is unclear. We believe that making this connection is creating the wrong narrative.
We need a narrative of growth that reinforces the long-term value creation, risk mitigation, and resilience building capacities that sustainability reporting and due diligence can bring to firms. Properly accounting for externalities and utilising a data led approach to understand your financial exposure to climate related risks is good business sense. Reporting requirements are not definitively a cost and framing them as such creates an environment where we solidify reporting as anti-growth. This, considering the scale of the challenge ahead, is not where we need to be.
The EU Omnibus represents a key juncture in sustainability regulation, one where businesses and policymakers must decide whether to see reporting requirements as an obstacle or as an opportunity. While it is undeniable that compliance introduces new complexities, framing sustainability reporting purely as a cost undermines the broader economic potential it unlocks.
The ability to collect, analyse, and act on sustainability data is no longer just a regulatory necessity, it is a strategic advantage. Those that recognize this will be best positioned to mitigate risks, drive innovation, and capture emerging market opportunities. Over time, as best practices, automation, and AI improve reporting efficiency, what once seemed like a burden will become second nature to us.
The outcomes of the omnibus are not the final chapter. Ultimately, the challenge is not the regulations themselves but the way we approach them. Instead of resisting sustainability reporting, businesses should embrace it as an investment in resilience, transparency, and long-term value creation.
Sources:
EU countries split over whether to delay green reporting rules | Reuters
Investor groups split over omnibus | Analysis | IPE
The US is threatening a war against European ESG directives Materia Rinnovabile | Renewable Matter