· 6 min read
The EU's push to simplify sustainability regulations is well underway. We are entering a decisive phase, with the Parliament set to negotiate its position in September/October and the final trilogue expected to take place in November and December. This is a good moment for reflection.
What, if anything, can we learn from what has happened? The lessons below are not exhaustive but offer a starting point for the discussion.
1. "Base simplification on experience and evidence, not politics"
Regulations rarely emerge perfectly formed. Adjustments based on real-world experience are natural and necessary. But in the case of CSRD and CSDDD, calls for drastic simplification came too quickly. To be fair, the original ESRS framework was indeed ambitious, and some technical simplification made sense. But the broader simplification push took off before any real implementation experience could be gathered. Pushing through significant changes without first collecting systematic implementation data on what exactly is in need of simplification left many with the impression that this is a political project rather than an attempt in meaningful improvements.
2. “Don't over-rely on employee headcount when scoping directives”
The Omnibus makes employee headcount a mandatory threshold for reporting, rather than just one of several qualifying criteria. But here’s the problem: headcount says little about a company’s actual sustainability impact. The result? Real estate and agriculture, sectors crucial to the green transition, will see a sharp drop in reporting obligations, simply because they employ fewer people on average. Meanwhile, healthcare and social work - important, but less central to green policy goals - remain heavily covered due to their labor-intensive nature. This mismatch risks undermining the EU’s green ambitions by leaving many high-impact companies outside the reporting scope.
3. "Communicate the value of sustainability regulations more clearly"
From the start, not enough attention was given to the strategic business value of directives like the CSRD and CSDDD. For the CSRD, this resulted in a rather strong focus on compliance which put costs into the center of attention. This narrow framing left the regulations exposed to criticism – for instance, that they undermine competitiveness. As EU Ombudswoman Teresa Anjinho recently pointed out: “The way these [omnibus] decisions are being perceived […] is that competitiveness is, in a way, coming at the cost of these legislative procedures and pre-established laws.”
4. "Start simplification at the technical level"
The first drafts of the revised ESRS prove: meaningful simplification is possible. However, instead of first aiming for such technical simplification that revises indicators, methods, and implementation processes, the Commission decided to immediately open up the CSRD and CSDDD themselves. To many this proved again: the simplification of sustainability reporting and due diligence is a political project. If simplification is truly the goal, the process should first start at the technical/operational level and then, if necessary and evidence-based, trigger further adjustments at the level of directives.
5. "Define the problem better before proposing solutions"
Simplification should start with a clear problem definition. However, the Commission's omnibus proposal only contained vague hints what problem is actually being addressed. It referred to "burden and compliance costs" (without defining them precisely) and the need for "improved international competitiveness" (without showing how the CSRD/CSDDD harm competitiveness). This missing link between problems and presented solutions created an environment
6. "Sequence interconnected regulations more effectively"
The CSRD, SFDR, CSDDD, and the EU Taxonomy were intended to interact with each other. But in practice, they were introduced out of sync. For instance, the SFDR became applicable to financial market participants in March 2021—yet some of the standardized corporate data that was needed for SFDR reporting was’t available at the time. A report to the European Parliament’s ECON committee made clear that the SFDR required financial market participants to report “without an adequate system of (corporate) sustainability reporting in the investee companies to support this.” (p. 16) This created confusion, frustration, and undermined trust in the regulatory framework.
7. "Provide clearer guidance to reduce ambiguity"
With the CSRD, CSDDD, and the Taxonomy, many criticized the vagueness of key rules and and the ambiguity of at least some of the underlying frameworks. While some ambiguity is expected early on, as regulations evolve through practice, the surprising part was the lack of timely, authoritative guidance. In some cases, it was missing altogether; in others, it arrived too late; in yet others non-mandatory guidance was treated as mandatory due to uncertainty. Often, this created higher costs as more resources were needed. Better guidance and greater patience for the associated learning processes could have helped ease this transition.
8. “Avoid manipulative language that distorts debates”
From day one, the regulatory revisions were framed as a “simplification.” However, it quickly became clear that simplification was being used as an euphemism for cost-cutting and deregulation, and it was paired with “competitiveness” in order to rationalize changes which some political actors had on their agenda for a long time. The result? A surge in cynicism. The “simplification” label persisted, providing political cover and softening public scrutiny of deeper rollbacks. Language gives meaning, and manipulative language manipulates meaning.
9. "Remember: good process builds buy-in"
The Commission framed the Omnibus as reflecting “critical urgency” and therefore decided not to conduct an impact assessment. However, it never really specified the link between reporting/due diligence and the critical urgency of competitiveness. Consultations on the Omnibus proposal itself also remained very limited - with two closed-door meetings held prior to the proposals. While it is important that regulatory processes happen swiftly, it is even more important that they retain a high level of integrity. Speed is not everything. In the end, the process (so far) has thrown up so many questions that even the European Ombudswoman started an inquiry in May 2025. The lack of proper process undermined trust and buy-in into what many perceived to be not a bad idea per se.
10. “Policy isn’t just about costs - it’s about value"
The Omnibus discussion has so far focused almost entirely on compliance costs. Yet costs are only one side of the equation. When lawmakers emphasize expenses alone, they risk reinforcing the notion that “sustainability is too costly and undermines competitiveness.” That perspective is not only one-sided but also shortsighted. Reporting and due diligence bring a host of well-documented benefits; from stronger risk management to greater investor confidence and long-term resilience. While costs are a legitimate concern, policymakers should lead by example and emphasize the broader goal: creating sustainable value that lasts.
So what?
The Omnibus process is a chance to improve - not undo - the EU’s sustainability rulebook. But if simplification is to succeed, it must be rooted in evidence, communicated with honesty, and guided by process that earns trust. The lessons above aren’t just critiques; they’re guideposts for doing better. The path to smarter regulation is still open, but only if we take stock with clear eyes and steady hands.
This article is also published on the author's blog. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.
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