Policy Brief - Green Disclosure: Red Tape or Strategic Tool?
Diluting reporting obligations risks creating uncertainty, weakening Europe’s competitive edge in green innovation, and sending conflicting signals to companies and financial institutions that have already invested heavily in compliance. A Policy Brief by Sylvie Goulard, and Keraron Aure
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This Policy Brief 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
The Corporate Sustainability Reporting Directive (CSRD) marks a crucial step for the European Union in consolidating a new approach to reliable sustainability data. It aims to make ESG disclosures mandatory for a large number of companies, extending beyond previous frameworks to cover not only climate change, but also pollution, biodiversity, resource use, social issues, and governance.
Adopted in December 2022, the CSRD establishes phased-in reporting obligations for large companies, listed SMEs, and certain non-EU companies operating in the EU. It introduces the principle of double materiality, requiring companies to disclose not only how sustainability issues affect them, but also how their activities impact society and the environment.
For the first time, an EU-wide audit requirement is introduced to enhance the reliability and comparability of sustainability information, aiming for a level of assurance similar to that required for financial data.
Despite these advances, the CSRD has faced criticism for its complexity and potential burden on European companies. With the start of the new Commission’s mandate in 2024, a strong political push for simplification led to the “Omnibus proposal”—a package aimed at reducing administrative costs and increasing competitiveness.
The omnibus directive proposes to drastically reduce the scope of companies subject to CSRD (by up to 80%), raise reporting thresholds, postpone requirements by two years, and streamline the European Sustainability Reporting Standards (ESRS), including a significant reduction of data points and a shift to voluntary reporting for most SMEs.
While simplification is a legitimate objective, we caution that an excessive rollback of requirements risks undermining both European and global sustainability goals. The rationale for the omnibus package—geopolitical tensions, economic headwinds, and diverging international standards—should not overshadow the long-term necessity of credible sustainability data. Climate change, biodiversity loss, and systemic risks to natural capital persist irrespective of short-term economic pressures or policy shifts in other jurisdictions.
Diluting reporting obligations risks creating uncertainty, weakening Europe’s competitive edge in green innovation, and sending conflicting signals to companies and financial institutions that have already invested heavily in compliance.
Moving forward, the European Union should avoid short-term deregulatory measures that risk fragmenting the single market. Reliable sustainability reporting is not a mere bureaucratic exercise, but a strategic asset that supports the EU’s unity, competitiveness, and leadership in the transition toward a sustainable economy.
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.
