In a significant political shift, the European People’s Party (EPP) formed an alliance with far-right parties to weaken the EU’s sustainability framework, marking the most coordinated move yet between centre-right and far-right factions on this agenda.

The outcome represents a setback for sustainable and accountable policymaking in Europe, with amendments including:

• Raising the CSRD reporting threshold to 1,750 employees and €450 million turnover, resulting in a reduction of ~92% of companies that were originally within scope of the CSRD.

• Thresholds for CSDDD have also been raised to 5,000 employees and revenues of over €1.5 billion. Those below the scope will be protected from requests by companies for information greater than that set out in voluntary sustainability reporting standards. Additionally, companies covered by the CSDDD are directed to rely on information that is already available, instead of systematically requesting information from smaller value chain companies, and to only request additional information from their smaller business partners as a last resort.

• Under CSDDD reference to climate transition plans was also stripped away and while those that have them still need to publish them under the CSRD, there is no requirement to implement them

• Removing civil liability provisions and the review clause intended to revisit them.

Next, the file moves into trilogue negotiations between the European Commission, the Parliament and the Council of the EU

For companies, and many of our clients, these ongoing shocks and changes raise one clear concern: clarity. And probably one clear emotion: fatigue. After all, unpredictability is the antidote to competitiveness, performance and focus.

The reality on the ground

However, what we must not lose sight of is that many Wave 1 businesses have already reported, and others are well advanced in their preparations to apply the European Sustainability Reporting Standards, demonstrating their committed to improving comparability, reliability and accountability in their ESG management and performance.

Whether forced to or voluntarily deciding to ask themselves the questions prompted by regulation such as the CSRD and CSDDD, leading businesses, IR and sustainability teams recognise that the costs of inaction far outweigh the cost of implementation, and that investors are increasingly expecting reliable, decision-useful sustainability information to guide capital allocation and stewardship.

This also makes competitive sense with research showing that businesses that excel in financial growth, profitability, and ESG (“triple outperformers”) deliver up to 7% higher annual total shareholder return (TSR) than those excelling only in financial metrics.

In addition, the ESRS is also explicitly designed to align with global standards such as IFRS S1/S2 and meshes with broader frameworks such as the updated Science Based Targets initiative (SBTi) and emerging net-zero guidance, creating a clearer line of sight from implementation to reporting.

There is also no doubt that the CSRD, and other regulatory frameworks, has been quietly rewriting the rule book on what best practice ESG reporting looks like, shifting the norms from glossy overview of activity to a rigorous reflection on performance and long-term risks and opportunities.  

No time to slow down

Even as the rules appear lighter on paper, CSRD expectations for traceability, auditability and data confidence remain as stringent as ever. For businesses with complex, multi-tier supply chains and significant climate risks, asking the hard questions is crucial to remain resilience and viable into the future.

In amongst all the chaos, it’s also easy to forget that the push for robust reporting was never just about compliance.

In its 2025 survey, PWC found that “more than two-thirds of companies that have already reported under CSRD or ISSB say they gained significant or moderate value, beyond compliance, from the data and insights collected during the reporting process. Those seeing the most value are most likely to be using the insights in areas such as overall business strategy, supply chain transformation, workforce transformation, marketing and risk management.”

While simplification and proportionality are vital, rigour and comparability are equally essential if we want investors, regulators and society to trust the numbers and reward credible progress.

So, what now?

Well apart from waiting to see what’s happens next, we should continue to focus on the opportunity of creating value and delivering decision useful information through reporting.

Because whether the rules tighten or loosen, the organisations that treat sustainability as a strategic capability, not a compliance cost, will be the ones that stay ahead.

Sound like the support you need right now? We can help you cut through the chaos and strengthen your sustainability reporting. Get in touch.