This article was first published in the 23rd edition of the Fact Book on 24 June 2025.
The European Commission’s Omnibus Simplification Package marks a significant step in easing regulatory burdens for companies and boosting EU competitiveness in a highly volatile geopolitical context. The current uncertainty in global trade creates unpredictability and imposes additional costs on operations, highlighting the important role of the package in reducing administrative burdens to enhance European competitiveness. Therefore, this simplification exercise holds promise not only for reporting companies, but also for asset managers who could support EU industries championing global markets, provided this simplification does not overly dilute the substance of reporting and due diligence obligations.
A new holistic approach
In recent years, asset managers have made significant efforts to integrate ESG (Environmental, Social and Governance) considerations into portfolio setups and risk management. The CSRD (Corporate Sustainability Reporting Directive), together with the ESRS (European Sustainability Reporting Standards), has been instrumental in creating a more coherent and structured flow of sustainability-related information. However, the complexity and high volume of reporting requirements have created an information overload and – on occasions - sometimes low-quality disclosures that hinder, rather than help, investment decision-making.
The proposed streamlining of reporting obligations is therefore a welcome development. A more-proportionate approach to sustainability disclosures can help relieve unnecessary administrative pressure and redirect focus on meaningful risk management and value creation. Indeed, simplification must not come at the expense of undermining the data granularity required for investors to assess sustainability risks and impacts accurately. Asset managers should have at their disposal a core set of harmonised, verifiable and meaningful sustainability-related data points covering key climate, biodiversity, social and governance metrics. These data points provide the backbone for sustainable investment strategies and stewardship activities.
The Way Forward
To preserve market confidence and transparency, any simplification must ensure that a minimum baseline of high-quality, sector-relevant disclosures remains intact. The double materiality principle, while complex, is crucial for capturing both the financial and societal dimensions of sustainability. Tailoring disclosure thresholds may be sensible, but the integrity of the overall reporting framework must be maintained. In addition, encouraging enhanced interoperability between the ESRS and the ISSB standards offers a valuable bridge between European and global reporting standards. This will reduce duplications and help asset managers operate across jurisdictions with greater clarity and efficiency.
Looking ahead, the Omnibus package should not be seen in isolation, but rather as a part of a broader optimisation of the EU’s entire sustainable finance rulebook. In this spirit, the upcoming review of the SFDR (Sustainable Finance Disclosure Regulation) should align with the streamlined ESRS framework, ensuring that asset managers' disclosures can be based on the consistent data they receive from investee companies. Bridging the gap between corporate reporting and investment transparency is essential for driving capital flows towards genuinely sustainable economic activities.
The EU’s simplification agenda is an opportunity to finetune without backtracking on its sustainability targets agenda. Asset managers support a regulatory framework that is both workable and rigorous. This simplification initiative should not only reduce unnecessary complexity but also empower sustainable finance by enabling more efficient capital allocation, improving data usability, and fostering long-term investment strategies that align with the EU’s climate and competitiveness goals. To this end, a robust European financial sector will continue to support the green transition, while financing a competitive and innovative European economy capable of withstanding geopolitical instabilities.
Notes to Editors
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