Brussels Pushes to Ease Sustainability Reporting Rules While Preserving CSRD Ambitions

Key Takeaways

• EU Sustainability Reporting Overhaul: The European Commission launched a public consultation on revised European Sustainability Reporting Standards aimed at simplifying compliance under the Corporate Sustainability Reporting Directive (CSRD).
• Major Reduction in Disclosure Requirements: The proposed revisions would reduce mandatory datapoints by more than 60% and total datapoints by more than 70%, with reporting costs expected to fall by over 30% per company.
• Focus on Simplification: The revised ESRS are designed to be shorter, clearer, and more flexible, while also simplifying the materiality assessment process companies use to determine what sustainability information must be disclosed.
• New Value Chain Protections for Smaller Firms: The proposal introduces a “value chain cap” preventing CSRD-covered companies from requiring suppliers and partners with 1,000 employees or fewer to provide sustainability information beyond the voluntary reporting standard.

Deep Dive

The European Commission is moving to scale back the complexity of the EU’s sustainability reporting regime, unveiling proposed revisions to the European Sustainability Reporting Standards that officials say will sharply reduce compliance burdens for businesses without dismantling the broader goals of the Corporate Sustainability Reporting Directive.

The draft revisions, opened Wednesday for a month-long public consultation, represent one of the clearest signs yet that Brussels is responding to mounting concerns from companies over the sheer volume and complexity of sustainability disclosures required under the CSRD framework.

The proposal also has a dramatic reduction in reporting requirements. The Commission said the revised ESRS would cut mandatory datapoints by more than 60% and reduce overall datapoints by more than 70%, while also simplifying the materiality assessment companies use to determine what information must be disclosed. The changes are expected to reduce reporting costs for companies by more than 30%.

The message coming out of Brussels is not that sustainability reporting is being abandoned, but that it is being recalibrated.

For many businesses across Europe, particularly mid-sized firms navigating overlapping regulatory obligations, sustainability reporting has increasingly become associated with sprawling questionnaires, extensive supplier data requests, and resource-intensive compliance exercises. The Commission’s latest proposal appears aimed at easing that pressure while keeping intact the EU’s wider push for transparency around environmental, social, and governance risks.

The revisions build on the EU’s Omnibus I simplification package, which narrows the number of companies falling within the scope of the CSRD and seeks to streamline how sustainability reporting obligations are applied across the bloc.

The updated standards themselves are shorter, clearer, and introduce what the Commission described as new flexibilities for companies. Much of the framework draws on technical advice developed by the European Financial Reporting Advisory Group (EFRAG), the Commission’s independent advisory body on reporting standards. Stakeholder input was gathered throughout 2025, including consultations conducted during the spring and summer.

Still, Brussels signaled that it went further than EFRAG’s recommendations in several areas, introducing additional targeted adjustments intended to further reduce reporting demands while preserving the policy objectives underpinning the CSRD.

One of the more consequential elements of the package may prove to be a new voluntary sustainability reporting standard designed for companies outside the mandatory CSRD scope, particularly smaller firms that often feel the indirect impact of large-company reporting obligations.

The proposal introduces what the Commission calls a “value chain cap,” an effort to curb the so-called trickle-down effect that occurs when large companies seek extensive sustainability information from suppliers and smaller business partners in order to satisfy their own disclosure obligations. Under the draft framework, companies subject to the CSRD would not be permitted to require value-chain partners with 1,000 employees or fewer to provide sustainability information beyond what is included in the voluntary standard.

The Commission’s accompanying explanatory guidance makes clear that the goal is proportionality.

While companies covered by the CSRD may still request additional information beyond the cap, they would need to clearly identify which requests exceed the framework and explicitly inform suppliers that they have a statutory right to decline providing the additional information.

The voluntary framework itself is split into two modules—a basic module aimed at the smallest companies and a more comprehensive module for larger organizations. The Commission also built in additional protections for micro-businesses, with some disclosures classified as mandatory for larger firms treated as voluntary for companies with 10 employees or fewer.

That distinction reflects a broader political and regulatory balancing act now underway across Europe. Policymakers remain committed to sustainability disclosure as a cornerstone of the EU’s long-term regulatory agenda, but they are increasingly under pressure to ensure the framework does not overwhelm businesses already grappling with economic uncertainty, operational strain, and a rapidly expanding compliance landscape.

The consultation on both the revised ESRS and the voluntary reporting standard will remain open until June 3. After that, the Commission intends to adopt the delegated acts and submit them to the European Parliament and Council for scrutiny under the EU’s no-objection procedure before the measures formally enter into force.

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