Sustainable finance

Since the beginning of the current mandate, the European Commission has been moving ahead with multiple initiatives to improve and simplify the EU sustainable finance framework. These efforts aim to make the framework clearer, more effective and more usable. We take a look at the main ongoing workstreams and their planned timelines.

Corporate sustainability reporting

As part of its February 2025 omnibus package, the Commission proposed a series of changes to the EU’s Corporate Sustainability Reporting Directive (CSRD).

These include

• “Stop the clock” proposal: This measure delays by two years (until 2028) the reporting requirements for companies currently in the scope of CSRD and which would have been required to report as of 2026 or 2027. The European Parliament and the Council have already approved this measure and Member States must now transpose it into their national laws by the end of the year
   
• “Content” proposal: The Commission proposed to remove 80% of companies from the scope of the CSRD, narrowing the focus to large companies with over 1000 employees. Additionally, it proposed to make taxonomy reporting voluntary for companies with an annual turnover below EUR 450 million. Finally, it proposed to remove both sector-specific reporting standards and the possibility of moving to a requirement for reasonable assurance. The proposal is currently with the Parliament and Council for their consideration and adoption
   
• SMEs and voluntary reporting: According to the “content” proposal, the Commission would adopt a voluntary reporting standard for companies out of scope of the CSRD (those with up to 1000 employees). This standard would be based on the voluntary standard for SMEs (“VSME”) developed by EFRAG, the Commission’s technical advisory body for sustainability reporting standards. It would act as a shield, limiting the information that companies or banks falling into the scope of the CSRD can request from smaller companies in their value chains that are out of scope. In the meantime, to address market demand, the Commission intends to issue a recommendation on voluntary sustainability reporting by SMEs as soon as possible, based on EFRAG’s VSME standard
   
• Revision of reporting standards: the Commission has committed itself to revising the European Sustainability Reporting standards (ESRS), which define how companies need to report under the CSRD. The aim is to substantially reduce the number of data points, clarify provisions deemed unclear and improve consistency with other pieces of legislation. The Commission has asked EFRAG to deliver draft revised standards by 31 October 2025. In the meantime, the Commission intends to adopt a “quick-fix” delegated act that would revise the existing ESRS to at least ensure that companies that had to begin reporting for financial year 2024 do not have to report additional information when reporting for financial years 2025 and 2026

EU taxonomy of sustainable economic activities

In the context of the February 2025 omnibus, the Commission also published a draft delegated act amending the EU Taxonomy Disclosure, Climate and Environmental Delegated Acts. Notably, the proposed amendments aim to simplify the reporting templates and exempt companies from reporting on activities that account for less than 10% of their turnover. Stakeholders were invited to provide feedback in a public consultation that closed at the end of March 2025, with adoption of the delegated act planned for June 2025.

In parallel, the Commission is reviewing the existing EU taxonomy screening criteria, including the “do no significant harm” criteria, with the objective of updating, simplifying and enhancing their usability. Tentatively, the feedback period could take place in early 2026, aiming to adopt a delegated act in the second quarter of 2026. Changes would then apply as of the reporting year 2027 (for the financial year 2026), or possibly 2026 if companies voluntarily wish to report against the revised rules. Later on, the Commission will also add new activities to the EU taxonomy, taking into account Commission priorities and industry demands.

The Commission is also reviewing the EU taxonomy disclosures rules with a simplification objective. The timeline for this revision has not yet been determined.

Sustainability disclosures in the financial sector

The Commission has also been reviewing the Sustainable Finance Disclosure Regulation (SFDR). In application since 2021, this regulation requires financial market participants and financial advisers to disclose sustainability information at entity and product level. The review looks at issues such as legal certainty, usability and how the regulation can play its part in tackling greenwashing. It will take into account input from stakeholders who took part in two consultations that were carried out in 2023 together with other input received since then. A proposal revising the SFDR is planned in the Commission work programme for the fourth quarter of 2025.

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Overall, the Commission’s efforts to refine its sustainable finance framework seek to align competitiveness with the EU’s climate goals. This will help create the conditions for EU businesses to thrive, attract investment, achieve our shared goals – such as the European Green Deal objectives – and unlock our full economic potential.

Related links

Omnibus package
Corporate Sustainability Reporting Directive (CSRD)
EU taxonomy
Sustainable Finance Disclosure Regulation (SFDR)

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