A leaked document in Brussels this week has led to concerns that the face of corporate sustainability reporting — and Europe’s broader ambition — is about to change dramatically.

The leaked bill implies a large number of businesses, except the largest companies, could be exempt from corporate sustainability reporting compliance.

The so-called ‘omnibus reforms’ to the European Commission’s Corporate Sustainability Reporting Directive (CSRD) were not unexpected, but some have said the changes are more like a severe watering down.

Chief amongst the complaints is that many businesses would apparently be exempt from the new reporting obligations altogether, and when the announcement was finally made on Wednesday (27 February), it turned out that four in five firms would effectively be exempt, if the bill passes in its revised form. The directive had stood to impact many companies doing business in EU countries, regardless of where they themselves are based.

For those still on the hook, requirements to monitor environmental and human rights abuses in the outer extremities of companies' global supply chains could be considerably reduced.

According to Reuters, the changes — which would simplify green rules for businesses — were aimed at making European industry more competitive in response to Donald Trump's promise to scrap or roll back on much regulation.

What was perhaps a carefully-communicated leak was then previewed in the Financial Times as part of a piece on broader climate softening by the EU, which led with a pledge to continue to stick to its “world-leading climate goals”, framing the change of heart as necessary because “the global reality has evolved”.

Critics will often bemoan the complexity of reporting obligations but as the FT pointed out, companies may also complain about the impact on them of such a regulatory flip-flop.

The World Wildlife Fund has called it “a ticking time bomb” for crucial EU sustainable finance laws, criticising having only been given since last Friday to comment on changes that were eventually announced less than a week later.

“In stark contrast to the years of evidence gathering, public consultations, and balanced negotiations that shaped the targeted laws, it highlights the lack of transparency and undue haste that critics have been warning about for months,” it said, calling on the Commission to stick to its broader Green Deal commitments.

It’s fairly easy to make a case that the directive as-was would have placed an undue burden on businesses and saddled many with a reporting burden that would cost a disproportionate amount of money to comply with, creating costs that would be passed on and unfairly hindering competition.

But the timing of the changes, amidst a politicised rolling back of some DEI initiatives and pressure on other regulation, is what catches the eye, rather than this being a reminder that the EU elections last summer saw much speculation over a softening of environmentally and socially-oriented regulation.