The reform of the EU's sustainability regulation is underway – what actions should companies take?

The Green Omnibus proposal published by the European Commission in February 2025 is, if implemented, a significant change in the regulation related to sustainability reporting. The aim of the proposal is to reduce the administrative burden on businesses and to make sustainability regulation clearer and better targeted. This applies especially to the Sustainability Reporting Directive (CSRD), the Corporate Responsibility Directive (CSDD) and the EU taxonomy, for which significant changes are proposed.

Key changes to the proposal include limiting the scope of the Sustainability Reporting Directive (CSRD) to large companies with more than 1,000 employees.

At the same time, the EU’s commitment to climate goals remains strong. The Green Industrial Deal and the EU’s broader climate policy emphasise supporting green technologies and more sustainable business. Thus, deregulation does not mean that climate-related expectations of companies are reduced – on the contrary, competitiveness and market confidence still require consistent and effective climate work.

Progress of the Green Omnibus reform

Nordic Impact closely monitors regulatory developments. So far, work on the proposal has progressed as follows:

  • February 26, 2025: The European Commission published the Green Omnibus proposal.
  • April 3, 2025: The European Parliament approved the “Stop the Clock” proposal, which postpones the implementation of certain CSRD requirements by two years. The reporting obligation for unlisted large companies starts from the financial year 2027 and for SMEs from the financial year 2028.

Impacts and what’s next?

The final adoption of the Omnibus proposal will continue to be subject to decisions of the European Parliament and the Council. Although the “Stop the Clock” decision postpones reporting requirements, companies should continue to prepare for sustainability reporting, but lighter requirements are expected, especially for the SME sector.

First wave reporters:
The first wave of NFRD (Non-Financial Reporting Directive) large listed companies and other public-interest entities have already published their first reports.   Reductions have also been proposed to their reporting content.

Second Wave Reporters:
The second wave includes other large companies that meet at least two of the following criteria: more than 250 employees, a balance sheet of more than EUR 25 million, or a turnover of more than EUR 50 million. The reporting of these companies was to start from the financial year 2025 and the first reports would be published in 2026. According to the Omnibus proposal, the reporting obligations of these companies can be postponed until 2028 or removed from the scope of the obligation.

Nordic Impact’s Recommendations for Businesses

Companies should not wait for the final form of regulation, but take strategic advantage of this transition phase. Climate work and sustainability are not only regulatory obligations, but also competitive advantages and risk management tools.

Focus sustainability efforts on key impacts.

  • Double materiality assessment  helps to identify business-critical sustainability issues.
  • Climate and biodiversity are key themes in many industries, regardless of regulatory changes.

✅ Create a credible climate transition plan

  • Markets and stakeholders expect increasingly clear transition plans for the net zero path.
  • The EU Green Industrial Deal highlights climate action and green investments – this is something to be prepared for.

✅ Strengthen data management and reporting

  • Regulatory easing does not eliminate the need for transparent and business-supporting sustainability data.
  • Invest in tools that enable efficient emissions calculation and strategic decision making.

✅ Go goal-oriented and develop a sustainability program

  • Companies don’t have to do everything at once, but systematic progress is essential.
  • The ESRS standards and the voluntary VSME standard for SMEs support the construction of the sustainability agenda.

Regulatory easing can provide companies with a respite, but the fight against climate change and sustainable business will remain strategic priorities. Now is the right time to invest in impactful sustainability efforts and make sure your business is ready for the demands of the future.

Nordic Impact supports companies in developing their sustainability strategy, emissions calculation and reporting. Get in touch – we help you navigate the changing regulatory landscape and focus on impactful climate action.