In sustainability reporting, regulation often becomes shorthand for strategy. When a company falls outside a legal reporting threshold, it may be tempted to conclude that the work can stop.
That would be a mistake.
The EU’s Sustainability Omnibus has materially reshaped the scope and timetable of corporate sustainability reporting and due-diligence obligations. Under the amended framework, mandatory CSRD reporting is focused on larger EU undertakings and groups, generally those with more than 1,000 employees and annual net turnover above €450 million. The revised CSDDD scope is narrower still, targeting companies with more than 5,000 employees and worldwide turnover above €1.5 billion.
This is a significant regulatory reset. But it is not a reset of market expectations.
For many businesses, ESG information will remain commercially relevant because it is increasingly requested by customers, lenders, insurers, investors, procurement teams and multinational value-chain partners. A company may no longer face a direct statutory requirement to publish a CSRD-compliant sustainability statement, yet it may still need to quantify emissions, demonstrate climate governance, respond to supplier questionnaires or provide credible transition information.
The implication is simple: mandatory reporting boundaries and stakeholder information needs are no longer the same thing.
From compliance burden to information strategy
The most useful response is not to maintain every process developed for full CSRD compliance. Nor is it to dismantle sustainability data collection entirely. Instead, companies should identify the information that remains decision-useful.
This usually includes:
A clear greenhouse-gas inventory, beginning with Scope 1 and Scope 2 emissions and progressing through material Scope 3 categories.
A practical view of climate-related risks, opportunities and business resilience.
Evidence of energy, resource-efficiency and decarbonisation actions.
Core policies and controls on material environmental and social risks.
A concise, credible explanation of targets, progress and governance.
In other words, the goal should be a proportionate ESG information architecture: robust enough to answer stakeholder questions, but not so complex that it becomes an administrative exercise detached from business decisions.
The value-chain reality
Large companies that remain in scope will still need reliable information from their suppliers, customers and partners. This means smaller and mid-sized businesses may continue to receive requests for emissions data, climate-transition plans, human-rights policies and other sustainability information.
The difference is likely to be one of format and proportionality. Rather than expecting every supplier to produce a lengthy, assurance-ready report, leading buyers should distinguish between material information needs and generic data requests.
For suppliers, that creates an opportunity. Organisations that can respond efficiently and credibly to sustainability requests may improve their position in tenders, supplier reviews and commercial negotiations. Sustainability information becomes not merely a disclosure exercise, but part of market access.
Do not confuse simplification with inaction
The Omnibus reflects a legitimate concern: reporting requirements must be proportionate, workable and capable of supporting competitiveness. Yet simplification should lead to better prioritisation, not weaker management.
Companies still face physical climate risks, energy-price volatility, supply-chain disruption, changing customer expectations and the financial consequences of poor environmental or social performance. Those issues do not disappear when a reporting threshold changes.
The businesses best placed to benefit from the new environment will be those that treat sustainability data as management infrastructure. They will retain what is useful, remove what is duplicative and focus effort on the information that supports resilience, financing, procurement and long-term value creation.
The future of ESG reporting may be less about producing more disclosure and more about producing the right disclosure.
Sources
European Parliament, “Sustainability reporting and due diligence: MEPs back simplification changes”: https://www.europarl.europa.eu/news/en/press-room/20251106IPR31296/sustainability-reporting-and-due-diligence-meps-back-simplification-changes
Latham & Watkins, “EU Sustainability Omnibus Published in the Official Journal”: https://www.lw.com/en/insights/eu-sustainability-omnibus-published-in-the-official-journal
Debevoise, “Sustainability Reporting and Due Diligence Requirements”: https://www.debevoise.com/insights/publications/2025/12/sustainability-reporting-and-due-diligence-require