Simplifying Sustainability: How the EU’s New Plan Will Boost Investment and Growth

European Commission has introduced a sweeping package of regulatory reforms aimed at reducing administrative burdens, accelerating investment, and aligning competitiveness with sustainability goals. With an estimated €6.3 billion (~$6.8 billion) in annual cost savings and a projected mobilization of €50 billion (~$54 billion) in additional public and private investment, these measures are set to reshape the EU’s business landscape while reinforcing its climate commitments.

Reducing Complexity in Sustainability Reporting

A central aspect of the reform focuses on simplifying sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy. Key changes include:

• 80% Reduction in CSRD Scope: Reporting requirements will now focus primarily on the largest corporations, ensuring that obligations align with companies that have the most significant environmental impact.
• Extended Deadlines: Companies initially slated for reporting in 2026 and 2027 now have until 2028 to comply, easing transition pressures.
• Streamlined Taxonomy Reporting: Smaller companies will see a significant reduction in reporting obligations, while larger firms will retain the option to voluntarily disclose sustainability data.
• Financial Materiality Thresholds: The EU Taxonomy framework will introduce financial materiality thresholds, cutting reporting templates by 70% and offering more targeted sustainability insights.
• Simplification of “Do No Significant Harm” (DNSH) Criteria: The most complex pollution prevention and chemical use criteria under the EU Taxonomy will be revised for greater clarity and efficiency.

These adjustments aim to reduce compliance costs while maintaining transparency and access to sustainable finance, fostering a more pragmatic approach to corporate ESG obligations.

Sogand Shaker, Head of Legal & Innovation at Treefera

“Simplifying compliance requirements is a positive step, as it will save businesses significant time and resources, lowering the barrier to entry for meeting regulatory standards. However, even with streamlined reporting, companies will still be required to capture and disclose detailed supply chain data – especially at the first mile – to ensure accurate insights into their environmental impact. The first mile alone accounts for 60 percent of carbon emissions, so changes to activity here will influence the entirety of their Scope 3 reporting requirements. It's critical for businesses to go beyond compliance and focus on long-term resilience – meeting regulatory standards is just the beginning. The companies that take a proactive approach to monitoring and improving their supply chains will be far better positioned to manage risk and adapt to future challenges.”

One thing remains crystal clear: accurate data from the first mile to the last is non-negotiable. Whether it's for compliance, sustainability reporting, or supply chain due diligence, companies need robust, end-to-end data to stay ahead of shifting expectations. And let’s not forget—the push for decarbonization and supply chain resilience isn’t just about compliance.

Find out more about it here.