CSRD & sustainability reporting growing pains

CSRD is an onerous reporting regulation - capturing over 1,000 datapoints, most publicly disclosed for the first time, and subject to independent assurance and scrutiny.

While most corporates accept the importance of the topic, many are observing that the burden of regulation and reporting is both costly and risks being a distraction from undertaking real, practical sustainability initiatives within their business.

This concern, amplified by German and French politicians, is coming into even sharper focus in recent months given the shifting rhetoric and anti-ESG lobby coming from the new US administration, leading to concerns that European regulation may leave businesses uncompetitive in the global marketplace.

This concern has been heard by EU policymakers, with the EU previewing as part of its recent “Competitiveness Compass” roadmap an intention to deliver a “Simplification Omnibus” package in February 2025 which aims to provide far-reaching simplification in topics such as CSRD, sustainability due diligence (CSDDD) and EU taxonomy.

With the EU having stated an ambition to reduce regulatory burden by at least 25% for large corporates, and 35% for SMEs, we expect to see a range of measures which may include reductions in metric disclosure volumes, longer phase-in timelines and measures to facilitate companies in transition. That said, the measures are expected to provide relief, not remove companies from the scope entirely.

Within KPMG Ireland we are fully supportive of regulatory simplification. The challenge for the EU will be in introducing simplification efforts that ease administrative burden for corporates without undermining the robustness and transparency which drove the introduction of CSRD in the first place.

Moreover it’s vital that CSRD, and its related regulations, continue to be viewed as strategic drivers of sustainable business transformation, and not merely another regulatory compliance exercise that erodes business competitiveness and promotes “green fatigue”.