Most companies in Europe are not in favor of the European Commission’s “Omnibus” initiative to reduce the sustainability reporting requirements and the scope of companies covered under the EU’s Corporate Sustainability Reporting Directive (CSRD), with a majority reporting being satisfied with the CSRD in its current form, although supportive of some improvements, according to a new survey released by professional network #WeAreEurope.

For the survey, conducted in partnership with business school HEC Paris, #WeAreEurope collected responses from business leaders involved in CSRD implementation at more than 1,000 companies in 26 countries across Europe, encompassing a wide range of sectors and company sizes. 40% of executives surveyed held C-level positions in their companies.

The survey was conducted following the release in late February of the Commission’s Omnibus I package, aimed at significantly reducing the sustainability reporting and regulatory burden on companies, with proposals for major changes to a series of regulations including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), as well as the Taxonomy Regulation, and the Carbon Border Adjustment Mechanism (CBAM).

Key proposed changes to the CSRD in the package include a dramatic reduction in scope, moving the regulation to cover only companies with more than 1,000 employees from the current 250 employee threshold, removing an estimated 80% of companies from the regulation’s sustainability reporting requirements. The proposal also aims to significantly reduce the number of data points included in the CSRD’s underlying European Sustainability Reporting Standards (ESRS).

Despite the political initiatives to reduce the scope reporting requirements of the CSRD, however, the report found significant report for the sustainability reporting regulation, with 61% of respondents reporting being somewhat or very satisfied with the CSRD in its current form, and only 17% reporting being dissatisfied.

Even among companies slated to be removed from the regulation’s scope under the Omnibus proposals, only 25% of those with 250-499 employees and 17% of those with 500-999 employees reported being dissatisfied with the CSRD in its current form.

When asked about the main strengths of the CSRD, 89% of respondents reported that the regulation improves ESG transparency for investors and other stakeholders, and 89% also said that it strengthens companies’ ESG strategy, risk assessment and impact management. Additionally, 88% said that the CSRD aligns with Europe’s economic, social, and environmental vision of companies, and nearly 80% agreed with its description as an efficient tool to help Europe achieve its sustainability ambitions.

The survey also explored perceived weaknesses of the CSRD, with a lack of sufficient guidance to support reporting topping the list, cited by 69% of respondents, 63% reporting that it is disproportionate for the smallest companies, and 63% of respondents said that the preparation of CSRD reporting is too time consuming and costly.

Notably, the response “it puts EU firms at a competitive disadvantage compared to non-EU firms because it is costly” was the least frequently chosen CSRD weakness, cited by only 37% of respondents.

The report found that only 25% of executives are satisfied with the Omnibus proposals, with slightly over half reporting being dissatisfied. Satisfaction levels did not appear to vary significantly by company size, with less than 25% of companies with between 250 and 999 employees reporting being satisfied with the Omnibus proposals.

The report also explored suggested solutions to correct weaknesses of the CSRD. Among companies that said that CSRD is too time-consuming and costly, 86% supported developing procedures to improve automation of data collection and report writing, and 82% supported reducing the number of mandatory indicators within the ESRS.

Among companies that said that the CSRD regulation affects too many companies, only 27% supported the Omnibus proposal to raise the threshold to companies with 1,000 employees, with much stronger support, at 46%, to set a 500 employee threshold.

Notably, even companies set to be removed from the scope of the CSRD supported the 500 company threshold, with even stronger than average support – 53%  – for this level among companies with 500-999 employees.

Study co-leaders Professor François Gemenne, Academic Director of the Master in Sustainability and Social Innovation and Brian Hill, Academic Director of the S&O Inclusive Economy Center at HEC Paris, said:

“In a context of geopolitical headwinds, the EU is currently faced with tough choices about the future some of its most ambitious sustainability-related policies, notably the CSRD. In today’s international climate, it alas bears repeating that policy choices such as these must be grounded on comprehensive, reliable information.  The EU’s decisions on the CSRD will have far-reaching consequences for businesses across the Union; their diverse perspectives should thus be heard and considered.”

Click here to access the survey.