EU Corporate Sustainability Regulations: Lagarde Issues Warnings against Overly Reducing Them
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The European Commission has announced plans to streamline and align the European Union's (EU) corporate sustainability reporting rules. The announcement, made by President Ursula von der Leyen, aims to address concerns about the current regulations being burdensome for companies and the need for simplification.
The proposed changes will move to align the Corporate Sustainability Reporting Directive (CSRD) with the Corporate Sustainability Due Diligence Directive (CSDDD). These directives aim to increase the transparency and comparability of sustainability information for companies in the EU.
The European Financial Reporting Advisory Group (EFRAG) is the central organisation responsible for developing technical standards for corporate sustainability reporting. The proposed reform or consolidation of reporting requirements could originate from EFRAG or other stakeholders such as the European Parliament, the Council of the European Union, or various interest groups.
However, as of September 2025, there is no confirmed information about a specific organisation that has proposed a comprehensive EU-wide regulation to further simplify corporate sustainability reporting beyond the existing CSRD and European Sustainability Reporting Standards (ESRS) regulations.
The EU's ambitions to spur private investment in green projects could be affected by the proposed changes. Some investors and companies are concerned that the EU's reporting rules could be rolled back, potentially weakening transparency.
The proposed omnibus regulation would remove around 80% of companies from the scope of the CSRD rules, with reporting applying only to companies with over 1,000 employees and a turnover of €50 million or a balance sheet of more than €25 million. Companies could report on a voluntary basis using sustainable reporting standards developed by the EU's standards body, EFRAG.
The proposed changes postpone reporting requirements for companies set to report in 2026 or 2027 by two years. The Eurosystem's ability to perform a granular assessment of climate-related financial risks could be weakened due to the proposed reduction in the scope of sustainability reporting requirements.
Christine Lagarde, the President of the European Central Bank (ECB), expressed her concern about the plans in a letter to European parliamentarians. The ECB has a climate factor in its collateral framework to manage financial risks from climate change. Climate change has profound implications for price stability, according to Lagarde, through its impact on the structure and cyclical dynamics of the economy and financial system.
For the latest updates on this and other initiatives, it is recommended to follow the websites of the European Commission and EFRAG, as well as reliable sources such as the EU Parliament Magazine or the Official Journal of the EU. If you have information about another organisation or initiative, please provide more context, and I will be happy to help further!
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