March’s Omnibus Package pulled a regulatory sleight of hand that might look like a relaxing of the rules, but under the surface, the ESG pressure cooker isn’t easing up.

Let’s break it down: the European Commission has decided to increase the employee threshold for companies required to report under the Corporate Sustainability Reporting Directive (CSRD)—the heavyweight successor of the Non-Financial Reporting Directive (NFRD)—from 250 to 1,000 employees.

This single, stealthy move could reduce the number of in-scope companies by 80%, from an estimated 53,000 to an incredible 10,000. That’s right: only one in five expected companies will have to file sustainability reports under CSRD.

A Delay, Not a Disappearance

Let’s be clear: This isn’t a bonfire of ESG regulations. It’s a pause, a strategic delay—two years, to be exact. The Omnibus Package is the EU’s regulatory rubber band, stretching the timeline without snapping it. Another round of ESG whiplash in the EU’s regulatory pendulum shows that regulatory shifts like these are happening in waves, with delays and new expectations continually reshaping the landscape.

Companies that fall below the 1,000-employee mark? You’ve got more time on the clock, but the buzzer will sound eventually. And for those still above that line—roughly 10,000, likely more when you scratch the surface of corporate structures—the ESG game just got lonelier, more intense, and still mandatory.

And the biggest plot twist? Even if you’re not legally required to report, you will have to anyway.

SMEs, You’re Still on the Hook—Here’s Why

Let’s talk about spillover — the regulatory kind. The real sustainability pressure isn’t just top-down from Brussels; it’s radiating outward from the giants.

Those 10,000+ “big” companies? They don’t operate in a vacuum. They’re massive hubs at the core of complex supply chains filled with small and medium-sized enterprises (SMEs). And here’s the kicker: if you’re an SME doing business with a major player, they’ll expect you to speak fluent ESG, too.

• Consumer pressure? White-hot.
• Investor scrutiny? Sharper than ever.
• Public accountability? Unforgiving.

So, even if the law gives you a break, the market won’t.

ESG Today Is All About the “E”

This entire recalibration of the EU sustainability policy still keeps its eye fixed firmly on the Environmental leg of the ESG tripod. This does not mean that the Social or Governance aspects are being completely ignored, but in this particular moment of climate chaos and ecological reckoning, carbon footprints and resource efficiency are hogging the spotlight.

And make no mistake, companies—especially the SMEs that dot the supply chains of Europe’s megacorporations—are being listened to. Your biggest client isn’t just asking about your emissions data because they care about the planet (though we’d love to believe it’s that noble)—they’re asking because they’re legally obligated to care.

So, What Should Companies Do?

At IMPAKTER, we’ve got our finger on the pulse of the industry, and our tools are ready. Even as the Omnibus Package redraws the reporting battlefield, the ESG expectations are still in play

• Large Enterprises (LEs): Yes, you might now fall outside the CSRD scope—but if you’re on the edge of that 1,000-employee cliff, it’s best not to bet your strategy on regulatory roulette.
• Small and Medium-Sized Enterprises (SMEs): You’re not off the hook. If you feed into a bigger fish’s supply chain, their ESG reporting needs become your ESG performance checklist. Carbon accounting, environmental impact assessments, sustainable procurement policies—these aren’t optional. They’re survival gear in the new sustainability economy.

And for those of us advising, tracking, and equipping companies through these shifting sands? Watch this space. The EU may have just stepped back to take a breath, but the next regulatory swing could land harder, faster, and with sharper teeth.

Bottom Line

The CSRD just got leaner. 

Some might say that sustainability reporting is dying, but that’s a bit dramatic — it’s simply evolving. 

The Omnibus Package might have eased the immediate burden, but the ESG movement is still marching, powered by market forces, consumer expectations, and regulatory inevitability.

Jazz may be all about improvisation, but this is one tune you’d better learn how and when to play.

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Editor’s Note: The opinions expressed here by the authors are their own, not those of impakter.com Cover Photo Credit: BECCA TAPERT