EU Faces Criticism Over Proposal To Limit Sustainability Disclosures

The European Central Bank (ECB) and other financial regulators have warned that the European Union’s (EU’s) proposed sustainability omnibus package, which aims to simplify climate reporting rules, could lead to greater financial risk.

The package would reduce the number of companies required to report under the Corporate Sustainability Reporting Directive (CSRD) and Due Diligence Directive (CSDDD). The ECB cautioned that limiting reporting obligations could weaken risk management and hinder green investment. It recommended maintaining reporting for companies with more than 500 employees and including significant credit institutions regardless of size.

Other regulators, including the Dutch AFM and European Banking Authority, echoed these concerns. They argued that access to reliable ESG data is essential for financial stability, investor confidence, and meeting the EU’s climate goals.