”Simplified reporting risks delaying the EU's green transition”

The European Parliament has approved changes to EU rules on the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Data Disclosure Directive (CSDDD). IVL sustainability expert Elin Nilsson believes that the changes reduce transparency and risk undermining the prospects for the green transition within the EU.

The simplification goes beyond technical adjustments. Approximately 90 per cent of the companies currently subject to the CSRD will be exempted, which will significantly reduce transparency and weaken a central part of the EU's framework for sustainable finance, says Elin Nilsson.

The European Commission presented an Omnibus proposal in February 2025 with the ambition of simplifying the CSRD, the CSDDD and other regulations. The European Commission, the Council of Ministers and the European Parliament held negotiations in November and December.

The final agreement was approved on 16 December. Among other things, the decision means that fewer companies will be required to comply with the CSRD and the CSDDD, and that reporting requirements will be simplified.

The past year has been marked by political disagreement over the design of the regulations, and for Elin Nilsson, the outcome was therefore expected. She welcomes the fact that the CSRD has been reviewed and that companies now have clearer guidance on what applies henceforth.

Predictability and stable rules facilitate planning, investments and prioritization.

However she points to several problems with the decision to significantly reduce the scope of the legislation.

In the short term, the changes may be perceived as an administrative easing. In the longer term, there is a risk that they will create a false image of stable business models, where significant risks remain but are not evident. With reduced incentives to develop and use decision-making tools to manage climate and natural risks, the conditions for long-term competitiveness and actual transition are also weakened.

According to Elin Nilsson, the CSRD gave companies' sustainability initiatives a clear mandate and the necessary resources, since the transparency requirements were legislated. Now that the requirements are being removed, she fears that budgets, personnel and organizational support for sustainability initiatives will be reduced.

This will lead to less reporting in the short term. In the longer term, sustainability initiatives risk becoming weaker and more fragmented, with poorer conditions for driving the transition that the EU simultaneously says it wants to accelerate. When the requirements are removed, not only will reporting decrease, but so will access to important decision-making data. Companies' understanding of how they affect – and depend on – the climate and nature will be weakened.

For more information, contact:
Elin Nilsson, elin.nilsson@ivl.se tel. +46 (0)10-788 66 89