Why EU Sustainability Reporting Changes Matter

Introduction to EU sustainability reporting changes

Over the past few years, EU sustainability reporting became the global reference point for corporate transparency. Now the rules are shifting again, and many sustainability professionals feel caught in the middle.

On 13 November 2025, the European Parliament backed a package of “simplification” changes. Sustainability reporting will apply only to companies with more than 1,750 employees and over €450 million in turnover. Due diligence rules will cover only corporations with more than 5,000 employees and €1.5 billion in turnover. Transition plans aligned with the Paris Agreement will no longer be mandatory, and liability for non compliance will sit at national level. A new free digital portal will support companies with templates and guidance.

Supporters say this cut in scope and detail reduces red tape. Critics see a serious weakening of corporate responsibility and of the wider EU sustainability agenda. Investors and NGOs warn that limiting EU sustainability reporting to fewer large players shrinks the data that markets and stakeholders rely on to assess risk.

For anyone working in ESG, this debate is not abstract. It changes how you design strategies, engage suppliers, and plan your own career path.

Benefits and risks of simplification

The new approach to EU sustainability reporting and due diligence brings real advantages for some companies:

• Lower administrative burden
  Fewer qualitative disclosures and optional sector specific standards can cut hours of data collection and drafting.

• Less pressure on SMEs
  Large companies will no longer be allowed to demand information beyond voluntary standards from smaller partners. This reduces the reporting burden deep in the supply chain.

• Clearer risk focus
  Due diligence will rely on a risk based approach that encourages companies to use existing information and engage smaller suppliers only when risks appear significant.

At the same time, the risks are significant:

• Much smaller coverage
  Moving thresholds up to 1,750 or 5,000 employees removes thousands of companies from EU sustainability reporting and due diligence rules.

• Less pressure for climate action
  Removing the obligation for transition plans weakens a core link between reporting and net zero strategy. Investors already warn that this “guts the impact” of flagship laws like CSRD and CSDDD.

• Global signal of softer enforcement
  Research on CSR in non Western contexts shows that when reporting is patchy, even top public enterprises often fail to disclose sustainability data and progress. A holistic and consistent reporting approach is needed to turn ESG from theory into action.

In short, simplification may help short term competitiveness but can undermine long term accountability if companies treat it as an excuse to disengage.

Practical steps for companies under the new rules

So how should sustainability leaders respond to the new EU sustainability reporting landscape in practice?

For companies still in scope

If your organisation remains covered by CSRD and CSDDD after the changes, think of this as a reset moment rather than a downgrade.

1. Prioritise quality over quantity
   Use lighter templates to improve the depth of key metrics instead of cutting effort. Focus on decision useful indicators, especially around climate, human rights, and supply chain risk.

2. Strengthen governance
   Ensure the board and executive teams still treat EU sustainability reporting as a strategic tool, not a compliance checklist. Align roles, incentives, and internal controls with clear ESG objectives.

3. Keep transition planning alive
   Even without a legal obligation, investors and rating agencies expect credible climate transition plans. Integrate scenario analysis and decarbonisation roadmaps into your strategy and keep them visible in your reports.

4. Use the risk based model wisely
   Map your value chain, identify high risk hotspots, and design targeted due diligence checks. Combine internal data, grievance mechanisms, and external platforms to avoid overloading small suppliers while still protecting people and planet.

For companies now outside the thresholds

If you fall below the new thresholds, do not assume sustainability is optional:

1. Maintain voluntary EU sustainability reporting
   A concise, voluntary ESG report aligned with leading frameworks signals seriousness to banks, buyers, and talent.

2. Prepare for buyer expectations
   Large customers may request proof of basic policies, grievance channels, and emissions data even if they cannot demand full reporting packs. Get ready with simple, reliable information.

3. Invest in core skills
   Build internal expertise on CSRD concepts, double materiality, and due diligence. The regulatory bar may rise again, and being prepared will protect your competitiveness.

Common mistakes to avoid under lighter rules

Many companies will make similar missteps in the next two years:

• Treating the new rules as a reason to cut ESG budgets.

• Dropping climate and human rights targets from KPIs because transition plans are no longer mandatory.

• Ignoring national liability, even though fines and compensation responsibilities remain in place.

Avoid these traps by treating simplification as a chance to redesign smarter, leaner, yet still credible sustainability management.

Real world impacts on global supply chains

Supply chain experts already see the practical consequences. With fewer mandatory disclosures, large companies must rely more on internal risk assessments and trusted data sources instead of blanket questionnaires. This can encourage deeper, partnership based engagement with high risk suppliers. 

At the same time, investors, NGOs, and leading brands warn that weakening EU sustainability reporting sends a confusing signal. Earlier in 2025, companies like Nestlé, Unilever, and Mars urged the EU not to dilute CSRD and CSDDD, arguing that stable, ambitious rules provide clarity for investment and long term planning.

For sustainability professionals, this creates both risk and opportunity. Organisations still need people who understand EU sustainability reporting, double materiality, and due diligence, and who can translate changing rules into practical action. Those skills remain highly valuable across sectors and regions.

FAQs

1. What is EU sustainability reporting simplification in simple terms?

It is a set of changes that narrows which companies must follow EU sustainability reporting and due diligence laws, reduces the detail required in disclosures, and removes mandatory climate transition plans, while keeping basic protections and national level liability in place.

2. Does simplification mean my company can stop reporting?

Not necessarily. Even if you fall below the legal thresholds, investors, banks, and major customers may still expect ESG disclosures. Voluntary EU sustainability reporting can remain a powerful tool for winning business, finance, and talent, especially in high risk or export focused sectors.

3. Is EU sustainability reporting still worth it for career growth?

Yes. The skills needed to understand CSRD, due diligence, and supply chain risk are in growing demand worldwide. As rules shift, companies need experts who can interpret complexity, design practical strategies, and communicate clearly with boards and stakeholders.

Start learning today

If you want to help organisations navigate the new EU sustainability reporting and due diligence landscape, now is the time to deepen your expertise.

Through the Sustainability Academy and CSE, you can follow a structured path to become an ESG certified consultant. You can attend a Certified Sustainability (ESG) Practitioner Program or complete the Online Diploma on Corporate Sustainability as part of the Certified Sustainability Consultant Scheme. These routes build skills in sustainability reporting, carbon reduction, social impact, circular economy, and ESG performance, all framed around global standards such as CSRD, GRI, SASB, and TCFD. Sustainability Academy

Beyond technical content, you gain a recognised badge, access to global research and webinars, and a network of more than 10,000 professionals. That combination helps you stay ahead of regulatory shifts, including the latest EU sustainability reporting changes, and turn them into career opportunities.

Why choose Sustainability Academy Certified Courses?

• Offer a unique Certification accredited by CPD in an affordable manner trusted by global Fortune 500 companies and global accounting firms for their staff education
• Content created by Sustainability thought leaders, professors and trainers with practical experience in the field of sustainability
• Self-paced Courses that can be completed anytime within 45 days
• Up-to-date content revised on annual basis that includes new legislations and trends based in field research
• Joined by thousands of learners from 90 countries, including Sustainability professionals, graduates and entrepreneurs from various sectors
• Receive your certification and badge via Credly, which is valid for one year. You can share your badge directly from Credly to LinkedIn, Twitter, and Facebook; over email; embedded in a website or in your email signature.