Public debate around ESG regulation continues to evolve, and recent developments suggest that significant adjustments may be on the horizon. At RSM Malta, we closely monitor these discussions to ensure our clients and partners remain ahead of emerging regulatory shifts. Early reports indicate that the European Parliament and the Council have reached a provisional agreement on the Omnibus package, which introduces notable amendments to the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive. If confirmed, these changes would reshape the ESG compliance landscape for companies operating across the EU.

Current briefings suggest that the scope of the Corporate Sustainability Reporting Directive could be significantly narrowed. Initial indications point toward applicability only to companies employing more than 1,000 people and generating at least €450 million in turnover. This substantial reduction appears designed to ease reporting pressures on smaller entities while maintaining robust expectations for larger organisations. RSM Malta has long observed the strain that extensive reporting obligations can place on businesses, and these developments reflect a more proportionate approach.

The provisional agreement also appears to introduce a review mechanism, allowing EU policymakers to revisit and potentially widen the scope of both directives in the coming years. This suggests that the current adjustments may be part of a phased regulatory cycle rather than a permanent retreat. As always, RSM Malta continues to guide clients through such transitional periods, helping them maintain long-term preparedness even amid evolving requirements.

In addition, several reports indicate that the requirement for climate transition plans under the due diligence directive has been removed. This shift is being interpreted as a move toward greater flexibility, enabling businesses to develop climate strategies that reflect their specific operational realities. From our advisory work, RSM Malta sees this flexibility as a welcome opportunity for companies to build climate-related frameworks that are meaningful and achievable rather than formulaic.

On due diligence, the Omnibus text appears to favour a risk-based approach. Instead of obliging companies to map their entire value chain, the revised model encourages targeted focus on areas where the likelihood of negative impacts is highest. Where severe risks emerge across multiple areas, companies may be allowed to prioritise direct business partners. This reflects an effort to retain accountability while reducing administrative complexity. At RSM Malta, we support organisations in establishing effective risk-based due diligence models that strengthen governance without creating unnecessary operational burdens.

The implementation timeline for the due diligence directive has also reportedly been extended, with transposition expected by mid-2028 and compliance obligations commencing in mid-2029. This extended timeframe provides businesses with a more realistic window to prepare solid structures. RSM Malta stands ready to help companies make full use of this transition period to build practical, resilient ESG frameworks.

Taken together, these developments point towards a more pragmatic approach to ESG regulation, one that balances ambition with feasibility. For RSM Malta, this represents an opportunity for businesses to concentrate on high-impact sustainability strategies rather than compliance for its own sake. As the regulatory picture continues to take shape, we remain committed to supporting organisations in enhancing governance, strengthening risk-based processes and preparing for future developments.

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Article written by Gianmarco Bourelly, ESG Consultant