EU Sustainability Reporting and Due Diligence: What’s Changing, and What It Means for Your Business

Summary

The European sustainability reporting landscape has never stood still, and now, it’s shifted once again. In a narrow vote, the European Parliament rejected the proposed “Omnibus Simplification Package”, a set of amendments designed to scale back the Corporate Sustainability Reporting Directive (CSRD) and related obligations.

For companies preparing for CSRD compliance, this latest twist raises as many questions as it answers. So where does this leave businesses today, and most importantly, what should they do next?

Before the latest Announcement: What Was on the Table?

Before this latest development, the CSRD was already reshaping how companies disclose sustainability information. In February 2025, the European Commission introduced the Omnibus Simplification Package, proposing changes to both the CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD).

The aim was to reduce administrative burden and give companies more breathing room. The proposals included:

• Raising the applicability threshold: from companies with over 250 employees to those with over 1,000. This would have excluded an estimated 80% of organisations previously expected to report.
• Delaying implementation: pushing initial reporting for many businesses to 2027, rather than 2026.
• Narrowing due diligence scope: focusing only on Tier 1 suppliers instead of full value chains and reducing the frequency of review cycles.
• Limiting requirements under the sustainable finance and taxonomy frameworks: reducing the number of companies required to publish transition plans or taxonomy-aligned disclosures.

The Commission framed these changes as pragmatic. They were a way to improve clarity and avoid a compliance “shock” for underprepared companies. But for sustainability advocates, it signalled a potential watering down of the EU’s flagship Green Deal legislation

What’s Changed (Again)?

This week’s vote in the European Parliament rejected the negotiating mandate on the Omnibus package. In practical terms, this means the proposed changes will not move forward, for now….

Here’s what that means for business:

• Uncertainty remains: The simplification package is not yet approved, and the future of any amendments is unclear. A revised position will be voted on in mid-November, but for now, businesses face a period of limbo.
• Original obligations stand: The CSRD and CSDDD still apply in their current form. Companies preparing for the broader reporting regime should not assume that scope or deadlines will change.
• Preparation still matters: Organisations already within scope should maintain momentum on compliance planning. For those currently outside scope, potential inclusion timelines remain uncertain.
• Strategic implications continue: Many firms have already invested in systems, governance, and data frameworks to meet CSRD requirements. Any delay could provide additional time, but there’s a big risk if the final rules revert to the original, more stringent standards.

The rejection of the Omnibus proposals is a reminder that the regulatory landscape remains fluid. Businesses would be wise to plan for the higher bar rather than gamble on simplification.

What Is the Current Status and What Should Companies Be Reporting On? 

Despite shifting political dynamics, the core structure of the CSRD remains in place. Under the current framework, companies in scope are expected to disclose decision-useful sustainability information across a broad set of themes.

Specifically, this includes:

• Business model, strategy and resilience – and how sustainability matters such as climate change, biodiversity, and human rights affect these.
• Policies, actions and targets – and how these link to each sustainability topic.
• Performance indicators – such as greenhouse gas emissions, biodiversity impacts, and social metrics, to enable comparability across companies.
• Assurance and digital tagging – sustainability information must be independently assured and digitally tagged to ensure transparency.
• Value-chain impacts – including upstream and downstream effects, covering the full lifecycle of products and operations.
• Double materiality disclosures – connecting sustainability impacts to financial performance and risk.

Even with ongoing uncertainty, the direction of travel is clear: companies should already be strengthening data collection systems, aligning governance structures, and preparing for assurance. Those who treat CSRD as a long-term transformational opportunity, rather than a compliance exercise, will find themselves best positioned when reporting becomes mandatory.

What Should Companies Expect Next? 

The next steps in the legislative process are set to unfold over the coming months:

• The European Parliament will vote on its revised negotiating position on the 13th of November 2025.
• Following that, negotiations between the Parliament, Commission, and Council will resume to agree the final text.
• A finalised package may be adopted by the end of 2025, or early 2026 at the latest.
• Once adopted, Member States will transpose the Directive into national law, setting new implementation dates and potentially revising thresholds or reporting deadlines.

Further regulatory guidance and updated European Sustainability Reporting Standards (ESRS) may also follow, clarifying expectations for companies newly in scope.

However, it’s important to recognise that while legislation evolves, stakeholder expectations do not pause. Investors, lenders, and customers increasingly expect credible, comparable sustainability information — regardless of if reporting is legally required.

In other words: even if the rules are delayed, the market is already moving ahead.

MyCarbon’s Recommendations 

Based on our work supporting clients through evolving sustainability regulations, here’s how we recommend approaching the months ahead:

1. Conduct a Double Materiality Assessment (DMA): A DMA is an incredibly powerful tool for identifying where sustainability issues intersect with financial performance and broader impact. It provides the foundation for credible, CSRD-aligned strategy. (Learn more about DMA here – Link to Johns Article).
2. Strengthen governance and strategy: Ensure that your board and executive leadership are engaged in sustainability oversight. Your business model, strategy, and targets should reflect a clear understanding of material risks and opportunities.
3. Build robust data systems: Start collecting data across your operations and value chain — including Scope 3 emissions, supply chain impacts, and social metrics. Define responsibilities and establish internal controls for assurance.
4. Align policies, targets, and transition plans: Review existing sustainability policies (covering climate, nature, human rights, and supply chain) and ensure they are consistent with your long-term strategy and targets.
5. Stay agile and informed: Monitor developments in the Omnibus negotiations, national transposition processes, and evolving guidance from regulators. Be ready to adapt your timeline and approach as new details emerge.
6. Communicate transparently: Whether or not you’re legally required to report yet, sharing progress on your sustainability journey builds trust with stakeholders and mitigates reputational risk.

Looking Ahead

The European Parliament’s rejection of the Omnibus package is not the end of the story, but it does reinforce a clear message: the EU’s sustainability reporting and due diligence agenda is here to stay.

Rather than waiting for perfect clarity, businesses should focus on building strong foundations now. Those who view the CSRD as an opportunity, not just an obligation, will be best placed to lead in a transparent, data-driven future.

At MyCarbon, we help businesses navigate this evolving landscape with clarity and confidence. From double materiality assessments to sustainability data governance roadmaps, our team translates complex regulation into practical action.
If you’d like to understand how the CSRD might impact your organisation, or how to prepare effectively, get in touch with our experts.

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