Natcap is the simple way to measure, report and act on nature-risk
Identify where you should prioritise your efforts, understand your nature impacts and dependencies, disclose to stakeholders and take action.
See how it works...
The European Green Deal, passed in 2020, set out to make the EU climate-neutral by 2050, but shifting political and economic realities, including COVID lockdowns, supply chain disruptions, and geopolitical tensions, have reshaped policy priorities. In response, the European Council adopted the Budapest Declaration in November 2024, aiming to enhance economic competitiveness by reducing regulatory burdens, including a 25% cut in reporting requirements by mid-2025.
As a first step in delivering on this commitment, the European Commission put forward the EU Omnibus in February 2025, a set of proposals designed to simplify and refine corporate sustainability regulations, particularly the Corporate Sustainability Reporting Directive (CSRD), the EU Deforestation Regulation (EUDR), and the Corporate Sustainability Due Diligence Directive (CSDDD). These revisions will ease reporting obligations for some companies while maintaining core sustainability objectives.
These proposals have a long road ahead before becoming law, but the direction of travel is clear. For those yet to start reporting in line with these frameworks, the EU will likely grant additional time or exempt you from having to report at all. However, for the largest companies who have already published their first CSRD report, the changes are less significant.
Independent of the unstable regulatory winds, smart leaders recognize that risk often comes with opportunity, and this holds true for nature-related risks as well. Businesses that take a proactive approach to redefining their relationship with nature are not only strengthening their own resilience but also contributing to a more stable operating environment for all. Integrating nature and its associated risks into strategic planning is crucial for long-term value creation. Voluntary frameworks that move beyond CSRD, such as the Taskforce for Nature-Related Financial Disclosures (TNFD), provide practical guidance on how to make it a core part of your approach.
In our recent webinar, we covered the EU omnibus and its implications for corporate sustainability and several key takeaways emerged that businesses should be aware of:
The Corporate Sustainability Reporting Directive (CSRD) was initially designed to expand corporate accountability by requiring companies to report on environmental and social impacts, including biodiversity, water, and pollution risks.
The Omnibus refines CSRD’s application, primarily by:
Impact: While CSRD still applies to large enterprises and financial institutions, the exemption of SMEs and removal of sector-specific guidance may reduce granularity in nature-related disclosures. This could create challenges for investors assessing biodiversity and climate-related financial risks.
Key Takeaway: While reporting burdens are reduced for smaller companies, businesses committed to sustainability leadership should continue voluntary disclosures to maintain transparency and stakeholder trust.
The Corporate Sustainability Due Diligence Directive (CSDDD) was designed to ensure that companies assess and mitigate environmental and human rights risks across their supply chains. However, the Omnibus introduces a more focused approach:
Impact: CSDDD still plays a crucial role in supply chain sustainability, but businesses in high-risk industries (such as agriculture, fashion, and electronics) may need to conduct voluntary due diligence beyond direct suppliers.
Key Takeaway: If your supply chain has indirect exposure to deforestation, pollution, or biodiversity risks, relying only on CSDDD-compliant due diligence may be insufficient to meet investor expectations.
The EU Omnibus is still a proposal and will go through multiple rounds of discussions in Parliament, the Council, and the Commission before becoming law. The political landscape is evolving, with the position of key member states having shifted markedly against sustainability reporting in recent months.
Germany has positioned itself as a leader in pushing for deregulation, advocating for reduced administrative burdens on companies. Italy and Spain have expressed concerns about losing competitive advantage due to uneven reporting requirements, fearing that companies in their jurisdictions may be at a disadvantage compared to those in less regulated markets. France, once a strong advocate for sustainability reporting, has notably shifted from a pro-sustainability stance to favoring deregulation, aligning more with business interests.
On the industry side, financial institutions are increasingly worried about how the Omnibus will affect SFDR (Sustainable Finance Disclosure Regulation). Without standardized reporting, the ability to assess sustainability-related financial risks may be compromised. Furthermore, the European Central Bank (ECB) continues to require banks to assess climate and biodiversity risks, emphasizing the ongoing importance of sustainability considerations even as regulatory obligations shift.
Rather than fully integrating sustainability regulations, the EU Omnibus shifts the focus toward larger enterprises and direct supply chain oversight, while reducing reporting burdens for SMEs and eliminating sector-specific standards. This leads to:
The result? Businesses must navigate a more fragmented sustainability landscape where reporting and compliance obligations do not always align.
Despite regulatory shifts, investor expectations remain high and risks to business are becoming ever more material. Businesses should take a proactive approach to managing nature-related risks:
Even with fewer mandatory disclosures under CSRD, companies with material nature-related risks are encouraged to align with voluntary frameworks such as TNFD (Taskforce on Nature-related Financial Disclosures). This enables companies to capture business value by properly measuring and managing material nature-related risks.
While CSDDD no longer requires deep supply chain due diligence, businesses operating in high-risk sectors should implement independent supply chain risk assessments to maintain credibility.
For more detailed guidance, download the webinar replay here.
The Omnibus still requires final negotiations in Parliament & Council, which will determine the ultimate regulatory framework. While the simplification of reporting requirements is a significant change, businesses should prepare for ongoing stakeholder pressure from investors and regulators like the ECB, ensuring sustainability remains a strategic priority.
Several key uncertainties remain, including:
The goal of the CSRD remains the same, improving transparency on sustainability topics, which means disclosure requirements are still likely to align with best practices such as those promoted by TNFD. However, with updates to the ESRS standards not expected before 2026, significant uncertainty remains around the specifics of future reporting obligations. Despite these delays, sustainability risks and investor expectations are not disappearing, and companies should continue integrating sustainability into strategic decision-making rather than treating it as a compliance burden.
What’s next? Businesses will have to balance regulatory compliance with investor and stakeholder expectations. While reporting obligations may shrink, market scrutiny of sustainability will not.
Unsure how your organisation is navigating these regulatory changes?
Let’s discuss.
Identify where you should prioritise your efforts, understand your nature impacts and dependencies, disclose to stakeholders and take action.
See how it works...
