The European Commission’s Omnibus Package, introduced in February 2025, marks a significant recalibration of the EU’s sustainable finance framework. It revises the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive and the EU Taxonomy Regulation. The goal is to simplify compliance, reduce reporting burdens and enhance legal clarity.
In Luxembourg, where sustainability reporting is already embedded, these developments offer both relief and renewed responsibility. Draft Bill No. 8370, which transposed the CSRD into national law, already incorporates the two-year delay in reporting obligations through its last amendment. Meanwhile, the proposed increase in applicability thresholds—to 1,000 employees and a EUR 50 million turnover—remains under discussion. If adopted, it could significantly reduce the number of entities subject to mandatory reporting, prompting further adjustments to the national framework.
In parallel, the European Commission’s introduction of a voluntary reporting standard for small and medium-sized enterprises (SMEs) in July 2025 provides a practical pathway for smaller entities. This new standard enables them to respond to ESG data requests and remain connected to the sustainable finance market, without bearing the full weight of CSRD obligations.
Further regulatory developments are also anticipated. Following the recent market consultation on the Sustainable Finance Disclosure Regulation, the European Commission is expected to propose revisions to clarify product classification and improve ESG data comparability.
Taken together, these measures reflect a broader shift toward proportionality and practicality in ESG regulation, particularly for SMEs, which now have the option to disclose ESG information voluntarily. This approach recognizes the diversity of business models and operational capacities, enabling companies to meet investor and stakeholder expectations in a way that suits their scale and resources.
“ESG remains a central pillar of investment strategy, and reliable data is proving indispensable”
ESG remains a central pillar of investment strategy, and reliable data is proving indispensable. The demand for transparency and purpose, especially from next-generation stakeholders, is reshaping expectations.
The transition to more focused and adaptable reporting standards is not a retreat from sustainability, but a pragmatic evolution. It broadens participation, streamlines reporting processes and encourages innovation in how companies approach ESG integration.
By aligning obligations with company size and complexity, the EU is fostering a more inclusive and competitive ESG landscape. Companies are encouraged to engage with sustainability in a way that is both manageable and meaningful — reducing complexity while maintaining transparency and alignment with market expectations.
This article was published in the 7th edition of Forbes Luxembourg.
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