**By: Stefan Premer, Director of Consulting at [Sphera](https://sphera.com/)**
In recent years, climate action and sustainability have surged to the forefront of the policy agenda across Europe. The EU has led this charge with initiatives such as the Green Deal, the Corporate Sustainability Reporting Directive (CSRD), and landmark regulations like the EU Taxonomy, all designed to steer the economy towards net zero and promote more sustainable, transparent business practices. However, in today’s complex economic and political climate, some argue that sustainability has become less of a priority. Rising costs and global competition have sparked a broader debate about the approach to the green transition.
This shift has been exacerbated by recent EU decisions intended to ease or simplify green regulations. Amendments to the European Sustainability Reporting Standards (ESRS) aim to reduce reporting burdens and introduce scaled-back requirements for smaller businesses. While these changes do not indicate a retreat from climate ambitions, they reflect a growing need to make regulation more proportionate and easier to implement.
In many instances, rather than laying a foundation for effective impact, the proposed changes have introduced uncertainty just as companies were preparing to act. This could jeopardise businesses’ sustainability ambitions, especially as key guidance that might have applied to a smaller number of businesses has been omitted in the simplified ESRS draft, along with entire subtopics, including waste discharge into the ocean.
For some firms, however, the additional time has allowed them to reassess their approach, paving the way for understanding sustainability not only as a compliance exercise but as a means to drive lasting value. This pause has shifted the focus from short-term compliance to more structured, long-term preparation, laying the groundwork for stronger, more reliable reporting, and embedding sustainability in business operations.
**A Window of Opportunity for More Meaningful ESG Reporting**
Sphera’s recent survey of nearly 400 EU business leaders found that over half of respondents viewed the reporting requirement delays as an opportunity to realign sustainability and supply chain goals. Instead of seeing the delay as a setback, many companies are using the time to improve data quality and better integrate environmental metrics into core operations.
This focus on long-term improvement is echoed by the 60% of surveyed leaders who stated their top priority during the delay is to enhance the quality of their sustainability data. Rather than treating reporting as a box-ticking exercise, this shift marks a move from reactive compliance to proactive sustainability management, setting the stage for more meaningful, integrated sustainability performance in the years ahead.
**Deepening Supply Chain Visibility**
The delay in reporting requirements is also prompting companies to look beyond their own operations and deepen their understanding of supply chain sustainability. According to Sphera’s survey, 28% of businesses are using the extra time to invest in greater visibility beyond their tier 1 suppliers. This step is critical given the rising expectations for value chain transparency under regulations like CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD). These companies recognise that meaningful sustainability reporting and risk management require insight into upstream activities, where many environmental and human rights impacts often occur.
More broadly, 53% of respondents have already increased efforts to manage supply chain risk through improved data. By strengthening the quality and reach of supply chain information, companies are not only preparing for more robust reporting but also building resilience against disruptions, from climate events to geopolitical shocks. This trend highlights the importance of sustainability data in operational and strategic risk management.
**Delays Have Created Space, and Now Companies Need Certainty**
Despite this progress, many companies express that the absence of concrete guidance from Brussels is becoming a barrier to progress. While the extension has provided breathing room, businesses are increasingly frustrated by the lack of clarity on next steps or discussions about current compliance thresholds. EFRAG, the advisory body to the EU Commission that developed the ESRS standards for CSRD reporting, reduced the number of required disclosures by two-thirds in its July update.
Excluding 80%-94% of companies from the CSRD poses long-term risks for the European economy. The European Central Bank criticised this in a [mid-August statement](https://media.licdn.com/dms/document/media/v2/D4D1FAQGVaGt_P32yxA/feedshare-document-pdf-analyzed/B4DZi447PXGkAY-/0/1755448589111?e=1756339200&v=beta&t=sJK31AGxkKoRgEQiZ3PV9jaiQRLWQ6q-HRXR6XTH8W4), noting the importance of ESRS amendments striking the right balance between retaining the benefits of sustainability reporting for the European economy and
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