Although recent regulatory changes under the EU Omnibus package mean that an estimated 90 percent of European companies will no longer be legally required to report on sustainability, market pressure on sustainability performance is not disappearing. Instead, it is shifting away from regulation and increasingly coming from value chains, financial institutions and business partners.
According to Sustainability Lens, a consultancy specializing in sustainability, climate and ESG advisory, the reduction in mandatory reporting obligations should not be interpreted as a signal that sustainability has become irrelevant for most companies.
“The end of mandatory reporting does not mean the end of sustainability-related risk,” said Mihaela Silvia Croitoru, CEO of Sustainability Lens. “For many companies, sustainability is no longer driven by regulators, but by the market. Clients, banks and partners continue to ask for data, assessments and evidence of sustainability performance, regardless of legal reporting thresholds.”
From regulatory pressure to market pressure
While fewer companies will fall directly under CSRD reporting requirements, many remain exposed to sustainability-related demands through indirect channels. Large corporate clients increasingly require ESG information from suppliers, financial institutions integrate sustainability criteria into credit and risk assessments, and procurement platforms such as EcoVadis are used as filters in supplier selection processes.
In this context, sustainability reporting becomes voluntary only in theory. In practice, it often remains a prerequisite for maintaining access to markets, financing and long-term business relationships. “Sustainability is becoming a condition for economic eligibility,” Croitoru explained. “Companies may no longer be required to publish a CSRD report, but they are still expected to demonstrate how they manage environment, climate, social and governance risks.”
Sustainability as risk management, not ESG rhetoric
This shift reflects a broader change in how sustainability is perceived inside organizations. Rather than being treated as a compliance-driven ESG exercise, sustainability is increasingly understood as a form of risk management and strategic decision-making. Companies are not affected by sustainability frameworks themselves, but by tangible risks such as volatile energy costs, supply chain disruptions, limited access to capital, reputational exposure and talent retention challenges. Reporting frameworks do not create or mitigate risks on their own, but they help make those risks visible, structured and therefore manageable through informed decision-making.
“When reporting obligations disappear, the risks do not,” Croitoru noted. “They simply become harder to see, which increases exposure rather than reducing it.”
Why double materiality analysis still matters
One concept often associated exclusively with CSRD and sustainability reporting is double materiality. However, according to Sustainability Lens, its relevance goes far beyond regulatory compliance. Double materiality analysis allows companies to identify both their most significant impacts on the environment and society, and the sustainability-related risks and opportunities that affect financial performance and future viability. When applied properly, it supports prioritization, investment decisions and long-term planning. “Even without mandatory reporting, double materiality remains one of the most effective tools for understanding where a business is vulnerable and where it should focus its resources,” Croitoru said. “Without this type of analysis, companies do not save money – they simply operate with less visibility.”
A new role for sustainability professionals
As sustainability shifts from compliance to competitiveness, the role of sustainability and ESG professionals is also changing. Beyond technical reporting, they are increasingly expected to translate sustainability topics into business-relevant insights for management, finance, procurement and risk teams. This includes supporting value-chain sustainability requests, EcoVadis assessments, internal training programs and the development of sustainability strategies aligned with business objectives. The real challenge today is not filling in templates, but connecting sustainability data with business decisions. Organizations that succeed are those that embed sustainability into how decisions are made, not just into how reports are written.
Sustainability as market readiness
According to Sustainability Lens, the most resilient companies in the current environment are those that treat sustainability as a form of market readiness rather than a regulatory obligation. This approach allows organizations to respond flexibly to external demands while avoiding unnecessary reporting complexity. Sustainability does not have to mean full-scale reporting for everyone. It means having the right data, processes and capabilities in place to respond credibly to market expectations. That is where competitiveness is built.
About Sustainability Lens
Sustainability Lens works with companies and leadership teams to integrate sustainability into risk management, strategy and decision-making. The firm supports organizations with market-driven sustainability assessments, double materiality analyses, EcoVadis evaluations, training programs and targeted sustainability reporting.
