Changing Regulatory Landscape 

At the start of 2025, over 50,000 businesses operating in the EU expected to fall under mandatory Sustainability Reporting requirements within the next two to three years. This anticipation spurred many into action, trying to get to grips with the EU’s Corporate Sustainability Reporting Directive (CSRD), launching Double Materiality Assessments (DMA), or seeking consultants for guidance. 

Then, in February, the EU Omnibus proposals arrived. Unless your company has over 1,000 employees, an annual turnover above €450 million, and significant European operations, you may have felt relieved: revised rules and delayed reporting requirements meant many smaller firms were effectively “off the hook.” 

For those operating only in the UK, it looks like a similar approach is being adopted with the proposed UK Sustainability Reporting Standards (SRS) appearing somewhat less demanding and more voluntary than was initially expected. We will know more by the autumn following the Government’s consultations on the exposure drafts of the SRS. 

Shifting Perspectives on Sustainability 

This apparent easing of ESG obligations coincided with a new US President, who not only denied the importance of addressing climate change but also actively opposed related action. The first quarter of 2025 signalled to many a global return to old ways, prompting some companies to slow or pause their ESG initiatives. 

For example, two companies approached us for help in January because CSRD loomed. But after the Omnibus announcement in February, both chose to deprioritize ESG. We advised that this was shortsighted and encouraged them to use this period to prepare for future requirements, but our advice was ignored. Notably, one of these companies has since returned, recognising that customer and tender demands for sustainability plans, measures and targets are only increasing, and more thorough responses are now required. 

Reframing the Issue 

Yes, mandatory reporting would have compelled more companies to take ESG seriously, potentially yielding positive change. But how many would approach this only for compliance, rather than to unlock the real opportunities a strong ESG strategy offers? For those in sustainability, what first felt like a setback might actually be a chance for businesses to regroup, gather relevant data, and establish a solid foundation for long-term progress. 

The EU’s Omnibus proposals, while presented as a way to “ease the burden” on smaller companies, can be seen as a window for thoughtful reflection. This pause can help companies evaluate their direction, collect meaningful information, and prepare a strong sustainability strategy. 

The Value of Voluntary Reporting 

You might still think that if you’re not required to report, you won’t. But reporting isn’t just about compliance; it brings clarity, structure, and credibility to ESG efforts. Choosing to report voluntarily offers several benefits: 

• Greater transparency and credibility 

• Enhanced reputation 

• Competitive edge 

• Better risk identification and management 

• Increased efficiency 

You don’t need to follow the VSME Standard strictly, but it’s a helpful starting point. Establishing a framework or roadmap is essential—don’t skip this step. 

It’s tempting to focus only on achievements and gloss over challenges or unfinished work, but resist that urge. Stakeholders—customers, consumers, employees—trust companies more when they are honest about both successes and setbacks. 

Getting Started 

Begin with internal reporting. Engage employees across all levels and departments so everyone understands your environmental, social, and governance commitments. Pairing this with ESG training will inspire support and innovative ideas from your workforce, helping your efforts succeed. 

When you’re ready, external reporting will distinguish your company and drive further action, as once goals and targets are shared publicly, the motivation to achieve them only grows stronger. 

If you need help on this journey, get in touch to see how GIRAFFE Associates could support you.