The European Central Bank (ECB) has issued a strong warning to the European Commission regarding its proposed Omnibus I package, which aims to simplify and reduce sustainability reporting obligations under the Corporate Sustainability Reporting Directive (CSRD) and related ESG frameworks. While the ECB acknowledges the need to ease compliance burdens, it cautions that drastically cutting the scope of sustainability disclosures could undermine ESG transparency and carbon neutral strategy goals across the EU. 

Under the Commission’s proposal, only companies with over 1,000 employees and €50 million in turnover would be required to report under CSRD—removing an estimated 80% of businesses from the framework. The ECB opposes this move, recommending that firms with 500–1,000 employees continue reporting under proportionate ESG standards. The ECB stresses that ESG risks are not tied solely to company size, and that many medium-sized enterprises and banks may still pose significant environmental or financial risks. 

The ECB also raised concern about the reduction of key data points in the European Sustainability Reporting Standards (ESRS), particularly those related to climate change, biodiversity, and ecosystems. It emphasized that such disclosures are critical for financial stability, monetary policy, and assessing climate-related risks. 

Additionally, the ECB warned that excluding third-country firms from similar reporting requirements may create data asymmetry and competitive disadvantages for EU businesses, further complicating the bloc’s transition to a carbon neutral strategy. 

In its opinion, the ECB called for retaining sector-specific ESG reporting guidelines and suggested maintaining mandatory disclosures for smaller companies under tailored frameworks. The central bank concluded that ESG transparency and sustainability data are essential to meeting the EU’s long-term climate goals and must not be compromised under the guise of regulatory simplification. 

Source: 

https://www.esgtoday.com/ecb-warns-eu-against-removing-80-of-companies-from-mandatory-sustainability-reporting/