Our thinking

Regulation rundown

29 November, 2024

Just when you think you’ve got a handle on all the new sustainability reporting regulations and their endless acronyms, the EU is shaking things up again. Earlier this month, the European Commission hinted at plans to merge the Corporate Sustainability Due Diligence Directive (CS3D), the Corporate Sustainability Reporting Directive (CSRD), and the Taxonomy, paving the way for potential revisions to all three.  

This move comes after significant pushback from businesses, many of which argue that the combined burden of these regulations is simply too much to bear. This was a common theme in our recent sustainability leaders panel, where 60% of respondents said they are spending more time on compliance with new or proposed sustainability regulations than ever before. 

Despite the administrative load, these regulations are proving effective. In fact, 42% of our sustainability leaders said that the increased reporting and disclosure requirements are driving more ambitious and integrated sustainability strategies. Meanwhile, 52% believe that these regulations are helping their businesses better identify sustainability-related risks and opportunities. 

But what does this announcement mean for your annual reports and the work that is already underway? The Commission President made clear that while the content of the law is sound and will not be changed, the sheer volume of datapoints that businesses are asked to collect—often redundant and overlapping—is overwhelming. The goal is to reduce the bureaucratic burden without altering the core content of the law. 

However, with both the European Parliament and the Council having the chance to propose amendments to the legislation, we may see ambition levels reduced. Just last week, the implementation of the EUDR was postponed, and the door opened further amendments that could potentially water down the legislation. It’s likely that there will be considerable pressure within both the Parliament and the Council to weaken the reporting standards if they are indeed merged. 

If this change delivers on its promise of a more streamlined approach to meeting reporting requirements, without altering the substance of the legislation, we see it as a step in the right direction. But it would be a shame to see it trigger further efforts to reduce the scope and ambition of regulation which is driving businesses to think deeply about sustainability. Nevertheless, as regulations evolve, we are here to help you navigate this shifting landscape, ensuring you’re not just complying with the law, but also unlocking the added value it can bring to your business. 

By Meg Seckel