From Consensus to Contention: The Political Reversal of the CSRD and Its Implications for European Sustainability Governance
A Critical Analysis of Regulatory Evolution, Stakeholder Alignment, and the Rise of Passive Resistance within the EU Framework. A paper by Pascal Durand.
This paper was prepared for the IEP@BU–SDA Bocconi event Sustainability Disclosure: Red Tape or Strategic Tool for the Future of Business? held on June 24, 2025.
Executive Summary
This paper examines the evolution, implementation, and political challenges of the European Union’s Corporate Sustainability Reporting Directive (CSRD) within the broader context of the European Green Deal and the Sustainable Finance agenda. Initially conceived as a cornerstone of Europe’s global leadership on ESG regulation, the CSRD emerged from a rare alignment among institutional, political, and stakeholder interests — including businesses, investors, trade unions, and NGOs — all demanding reliable, comparable, and enforceable sustainability data.
Driven by the European Commission’s post-Paris Agreement commitment to integrate environmental, social, and governance dimensions into its legislative architecture, the CSRD was widely supported across EU institutions and Member States.
It introduced key innovations such as the principle of double materiality, sector-agnostic European Sustainability Reporting Standards (ESRS), and an effort to align corporate governance with climate and human rights responsibilities.
However, the political environment has shifted dramatically since the CSRD’s adoption. The rise of anti-regulatory sentiment, ideological backlash, and electoral changes in 2024 have resulted in a partial rollback of the EU sustainability framework. Through the "Omnibus I & II" legislative packages and the adoption of the "Stop the Clock" Directive, implementation timelines have been delayed, and key provisions reopened for negotiation. The CSRD, once a symbol of EU sovereignty in global standard-setting, now risks becoming collateral damage in a broader deregulatory trend.
Despite this institutional uncertainty, the paper shows that many companies and investors across the EU are moving ahead with implementation of the CSRD and ESRS, recognizing their strategic value.
Surveys confirm that a majority of firms view the new standards as useful tools for risk management, transparency, and competitive positioning. In parallel, the Due Diligence Directive (CSDDD), which complements the CSRD by introducing obligations to act rather than merely disclose, has faced more virulent opposition, exposing deeper tensions in the EU’s political economy of sustainability.
The paper concludes that while the legislative push may be weakening, stakeholder-driven momentum persists. This transitional moment calls for regulatory clarity, legal stability, and a renewed effort to anchor sustainability in Europe’s long-term economic and democratic model.
IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
