Travers Smith's Sustainability Insights: Sustainability reforms lack a convincing theory of change

Reforms to the EU's Corporate Sustainability Reporting Directive (CSRD, which mandates sustainability disclosures) and Corporate Sustainability Due Diligence Directive (CS3D, which requires companies to mitigate adverse impacts) are all but agreed.  The European Parliament approved the final text of the amended laws at the end of 2025, and the European Council is expected to give the formal go-ahead shortly.  As we explain in our detailed briefing, the EU's dramatic changes to these key regulations are remarkable. 

The sustainability omnibus, one of several simplification initiatives launched last year, goes further than the Commission's original proposals – and even those initial suggestions, published in February 2025, were considered dramatic.  The push to "simplify" – or, more accurately, to deregulate – followed a political backlash against rules that would have imposed very significant additional burdens on businesses inside and outside the EU.