We have a case of sustainability reporting overload. The EU needs a smarter fix

By Apostolos Thomadakis and J. Scott Marcus

The EU’s sustainability reporting rules urgently need to be recalibrated. What began as a bold legislative push to steer markets towards environmental and social goals is now showing signs of regulatory overreach. Companies, especially SMEs, are struggling to navigate three major frameworks: the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy Regulation.

The European Commission’s proposed Omnibus Directive is meant to ease this burden. But a CEPS independent analysis, conducted for the European Parliament (EP), finds that the proposal falls short. It focuses too narrowly on reducing the number of companies in scope or the frequency of reporting, while overlooking the deeper challenge – namely the cumulative and interdependent nature of the obligations these frameworks impose in practice.

The real issue isn’t legal duplication but operational convergence. Unless this is addressed through more integrated guidance, coherent standards and clear reporting pathways, Europe risks undermining both its sustainability ambitions and its global competitiveness.

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