On February 26, 2025, the European Commission revisited the topic of sustainability, with the clear objective of simplifying previous regulations and reducing bureaucratic burdens.

In recent years, the EU has played a pioneering role in corporate sustainability regulation, introducing measures such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), aimed at ensuring greater transparency and accountability in business activities. However, the administrative burden of these regulations has drawn significant criticism, especially from small and medium-sized enterprises, which cite excessive costs and bureaucratic complexity.

The most recently introduced directive, EU Omnibus, encompasses a package of textual amendments and revisions to existing measures.

With this proposal, the European authorities aim to lay solid foundations for improving business competitiveness by responding to increasing pressure from the business sector, fostering economic growth and innovation, and attracting more capital toward sustainable investments. The challenge lies in balancing ambitious sustainability goals with the practical needs of market players.

Within the EU Omnibus directive, a series of amendments are proposed to simplify sustainability reporting obligations for European companies.

As for the CSRD, the main proposals include:

• Postponing the application from 2026 to 2028;
• Maintaining the concept of double materiality (financial and social) as a mandatory strategic exercise;
• Revising eligibility thresholds: the CSRD would apply only to companies with more than 1,000 employees and revenue exceeding €50 million or a balance sheet above €25 million. Smaller companies may adopt a voluntary standard (VSME);
• Limiting data collection obligations by removing the requirement to collect data from suppliers not subject to the CSRD;
• Abolishing the initially foreseen sector-specific standards;
• Revising the ESRS (European Sustainability Reporting Standards), likely reducing the volume of data to be collected.

Regarding the CSDDD, the key proposals include:

• Postponing the application from 2027 to 2028;
• Limiting due diligence obligations to direct business partners, excluding the entire value chain;
• Modifying the frequency of reporting requirements, proposing evaluations every five years instead of annual monitoring;
• Removing the requirement for fines to be proportional to company turnover. Member States may still impose penalties, with the European Commission offering guidance on appropriate amounts;
• Transition plans are recommended but will no longer be mandatory.

On Thursday, April 3, 2025, fulfilling previous promises, the European Parliament adopted the “Stock the Clock” directive, delaying the entry into force of the CSRD by two years and the CSDDD by one year. A public consultation was also launched, running from February 26 to March 26, 2025, concerning proposed amendments to the delegated acts of the Taxonomy Regulation. Key points include:

• A 70% reduction in required reporting templates and the introduction of a financial materiality threshold;
• Under certain conditions, non-financial companies may be exempted from reporting OPEX indicators;
• Non-financial companies with fewer than 1,000 employees will be exempt from calculating key performance indicators (KPIs).

Meanwhile, all other planned changes to the CSRD and CSDDD will be discussed at a later stage before implementation.

The adoption of the Omnibus package, representing a compromise between sustainability and competitiveness, will have significant international repercussions—particularly concerning the EU’s global competitiveness, trade relations, and political positioning.

Europe must now navigate a complex game of opposing pressures in its sustainability journey. On one hand, easing reporting requirements could improve the EU’s attractiveness to investors, narrowing the gap with countries like the United States and China, where regulations are less stringent. On the other hand, it risks compromising the EU’s leadership in sustainable regulation. Similarly, simplifying the CSDDD may reduce pressure on multinationals working with suppliers in developing countries, but it could also weaken the EU’s ability to enforce higher environmental and social standards.

The package may be perceived as a win for industrial lobbies, which have long advocated for reduced red tape. However, it risks alienating environmental groups and transparency advocates, who view these changes as a step backward from the goals of the European Green Deal.

Ultimately, the EU Omnibus package marks a turning point in the European sustainability strategy. The European Commission’s proposal to simplify existing rules and reduce bureaucratic burdens responds to a concrete need voiced by many economic players, particularly SMEs, often overwhelmed by complex and costly compliance requirements. This legislative intervention seeks to rebalance ambition with feasibility, ensuring that Europe remains fertile ground for growth, innovation, and investment attractiveness—without abandoning the core principles of the Green Deal.

The real challenge, however, will lie in the effective implementation of these changes and their ability to preserve—or even strengthen—the EU’s leadership in sustainability regulation. The risk is twofold: excessive deregulation could undermine the credibility and impact of European environmental and social policies, while overly rigid rules may hinder economic development and international competitiveness.

“At Isoclima, we believe that genuine sustainability is not about compliance alone, it’s about making impactful changes where it matters most. While we remain committed to meeting reporting requirements, our focus extends far beyond the mere act of disclosure. We aim to embed sustainability deeply into our operations, culture, and strategic decision-making,” says Meron Solomon Hussen, Corporate Sustainability Program Manager of Isoclima Group. “The proposed changes present an opportunity for companies to reflect on their true intentions. Are we merely chasing compliance, or are we actively working towards meaningful progress?” she continues, “At Isoclima our answer is clear: we are committed to building a sustainable future not because regulations demand it, but because it is the right thing to do. We also believe that this moment presents an opportunity to reshape the conversation around corporate sustainability. While compliance will always be a component of responsible business, we should not let it overshadow the broader mission of building a healthier planet for future generations. Even as we await final approval of the proposal, our commitment to sustainability remains firm. We will continue to report on our progress, but more importantly, we will continue to take concrete steps toward building a genuinely sustainable business. Now is the time to demonstrate that true sustainability leadership goes beyond compliance—it is about purpose, responsibility, and action.”

The task ahead is to build a balanced sustainability model, capable of addressing the needs of all stakeholders: institutions, businesses, investors, citizens, and the environment. A continuous, transparent, and constructive dialogue among these actors will be essential for Europe to truly lead the transition toward a more sustainable, equitable, and resilient future—leaving no one behind.