The European Union is considering reforms to its sustainability regulations under the Green Deal, aiming to reduce the reporting burden on businesses. The proposed Omnibus Simplification Package targets a 25% reduction in reporting requirements for all businesses and a 45% cut for small to medium-sized enterprises (SMEs). This initiative will focus on the EU Taxonomy, Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD), potentially reshaping the future of ESG (Environmental, Social, and Governance) and sustainability reporting across Europe. 

As part of its commitment to the Paris Agreement, the EU introduced a series of measures to address climate change, including the 2020 EU Taxonomy for Sustainable Activities, which classifies activities deemed environmentally sustainable. The CSRD, effective in 2025, will require large companies to report on GHG emissions and other ESG factors, with smaller companies and high-emission sectors facing additional reporting requirements. Meanwhile, the CSDDD, adopted in 2024, holds companies accountable for their supply chain’s ESG compliance. 

In response to these regulations, the Accounting Standards Committee of Germany (ASCG) proposed four key amendments to ease the reporting burden. These include graduated reporting requirements for mid-cap companies, voluntary application of VSME standards for smaller firms, and a suspension of the timeline for sector-specific standards. These recommendations align with the EU’s plans to simplify the regulatory framework, reducing bureaucratic complexities while ensuring that companies remain committed to sustainability and carbon neutral strategies. 

The final draft of the Omnibus Simplification Package is expected by February 26, with extensive lobbying from governments, businesses, and climate advocates shaping the final direction. The goal is to strike a balance between ESG goals and economic efficiency, ensuring businesses can meet carbon neutral targets while minimizing regulatory burdens. 

Sources: 

https://www.forbes.com/sites/jonmcgowan/2025/01/31/german-financial-regulator-calls-for-reduction-of-eu-sustainability-reporting/ 

https://www.esgtoday.com/germany-pushes-to-delay-csrd-sustainability-reporting-requirements-for-smaller-businesses/#:~:text=The%20government%20of%20Germany%20is,2%20years%2C%20and%20eliminating%20sector%2D 

https://www.cleanenergywire.org/news/uncertainty-abounds-over-german-governments-backtracking-eus-sustainability-reporting-rules 

https://www.responsible-investor.com/esg-round-up-german-ministers-call-for-significant-reduction-of-csrd-requirements/