New ESG rules: simplification or risk for sustainability?

Over the last few years, corporate sustainability has become a pillar of corporate strategy, with the European Union at the forefront of ESG regulation. However, the recent Omnibus Package, proposed by the European Commission, could redefine the regulatory scenario. The key question is: does this review represent a step forward in simplification or does it risk compromising transparency and corporate engagement?

A package to lighten the regulatory burden

The Omnibus Package was created with the aim of harmonising and streamlining the application of ESG regulations, including the CSRD (Corporate Sustainability Reporting Directive), the CSDDD (Corporate Sustainability Due Diligence Directive), the EU Taxonomy and the CBAM (Carbon Border Adjustment Mechanism).

Among the most discussed proposals are:

• the increase of the threshold for mandatory CSRD reporting from 250 to 1,000 employees, reducing the burden for approximately 85% of companies currently affected.
• the elimination of the reporting obligation for listed SMEs, which could still join on a voluntary basis.
• the introduction of a new voluntary standard based on the EFRAG VSME framework.
• the two-year delay of the application of the CSRD and CSDDD.

These changes have prompted mixed reactions: on the one hand, many companies welcome the reduction in red tape; on the other, there are concerns that the regulation will be watered down, with a negative impact on the transparency and credibility of ESG commitments.

Simplification or regulatory unknown?

The critical issue raised by experts concerns the possibility that the Omnibus Package will make the regulatory framework less stable, creating uncertainty among companies that have already invested significant resources to comply with current standards.

Some companies may delay their ESG plans, waiting to see if and how regulations change. This could lead to a general slowdown in sustainable investing, at a time when stakeholder pressure is higher than ever.

Nonetheless, supporters of the proposal say the aim is not to reduce transparency, but rather to avoid an excessive administrative burden, especially for small and medium-sized companies that struggle to manage the complexity of ESG regulations.

Europe and the Comparison with Global Standards 

Another relevant aspect is the comparison with international regulations. While the EU focuses on a double materiality system and stringent obligations, the US, with the Securities and Exchange Commission (SEC), focus only on certain environmental aspects, such as Scope 1 and 2 emissions. 

Meanwhile, the ISSB (International Sustainability Standards Board) is developing a more flexible global standard, designed to be adopted in various contexts. This could lead to a scenario where European companies, subject to stricter regulations, are disadvantaged compared to global competitors. 

The Omnibus Package could therefore represent an attempt to bring EU rules closer to a more international standard, avoiding excessive market imbalances.

ESG remains a priority, despite uncertainties 

Despite regulatory changes, sustainability remains a strategic pillar for companies. Beyond legal obligations, consumers, investors and business partners are increasingly demanding transparency on ESG policies.

Forward-looking companies will continue to invest in sustainability to:

• Map climate risks, avoiding negative impacts on the supply chain.
• Ensure business resilience by integrating ESG criteria into long-term strategy.
• Maintain a competitive advantage by meeting market expectations.

Although the Omnibus Package offers some breathing space for companies, the message is clear: ESG is not an option, but a necessity for the future of business. 

Conclusion: The EU is trying to balance ESG regulation between transparency and simplification. However, companies should be prepared: regardless of regulatory obligations, sustainability is now a decisive factor for success in the global market.