Corporate Sustainability Reporting Directive Updated – Are You Ready?

Another month, another change. Not in the season, but in sustainability reporting.

The EU’s Corporate Sustainability Reporting Directive, to be exact.

As Vogue Business reports, the CSRD underwent significant revisions in May 2025, sparking widespread discussion within the fashion industry. The initial CSRD rules, set to roll out over 2024–2026, were expected to apply to nearly 50,000 companies, including many mid-sized businesses across the EU. 

But swift business backlash to the CSRD ensued: Many companies raised concerns that the breadth and complexity of the requirements were too burdensome, especially for those with limited resources or small ESG teams. So, there was a real bid to reduce the administrative burden on businesses — and, in response, the European Commission proposed reducing the number of in-scope companies by 80%, particularly easing obligations for non-listed SMEs.

And this is just one of the motivators sparking the updates and revisions to the CSRD. 

While intended to alleviate issues — like those we’ll examine in this article — and enhance global competitiveness, even the well-intentioned CSRD revisions have raised concerns about potential setbacks in transparency and accountability efforts within the fashion sector in the EU.

These newest developments present a complex challenge for ESG managers of EU fashion brands. They’re charged with balancing the thin line between comprehensive sustainability reporting and an evolving regulatory landscape. It’s an act requiring careful navigation, and constantly changing requirements place additional burdens that, if mismanaged, can become blockers to successful adoption.

However, this juncture also offers an opportunity. Proactively adapting to the revised CSRD requirements will require out-of-the-box thinking: like leveraging digital tools and robust data collection methods to support compliance while enhancing brand reputation and stakeholder trust.

In the following sections, we will delve into the implications of the CSRD updates for the fashion industry, exploring strategies for effective adaptation and continued progress toward greater transparency in the EU.

Why (& How) the EU’s CSRD is Redefining Corporate Accountability

If you’re looking at the recent changes and asking, “Why? And why now?” you’re not alone. 

Equally, if you’re cheering on the revisions, you’re likely to already understand the environment we’re operating in — and what the revisions intend to achieve in this global context. We’ve already seen how the business backlash triggered a revision designed to reduce the number of companies this would apply to by 80%. 

Let’s look at a few more issues leading to these revisions.

Issue: A Political Push for “Competitiveness”

With EU elections on the horizon and growing populist sentiment, some policymakers pushed back against what they perceived as regulatory overreach in the name of sustainability.

Revisions triggered

There was an overall bid toward deregulation, reflecting a broader EU-level shift toward easing red tape to support economic growth and reduce business costs, especially regarding the European Sustainability Reporting Standards.

Issue: Concerns Around Data Availability and Readiness

Many companies — and national governments — raised flags about their lack of readiness to collect the type and depth of data required under the CSRD’s European Sustainability Reporting Standards (ESRS).

Revisions triggered

A press release by the European Commission acknowledged this challenge by proposing to postpone certain sector-specific and non-EU parent company reporting obligations by two years.

Issue: Focus on Tier 1 Supply Chains Only

There’s still an issue with reduced visibility into supply chains, which is a key source of acrimony for ESG managers who want to address environmental and social impacts comprehensively. However, they also expressed a need to make implementation and adoption more feasible in the short-term.

Revisions triggered

• The revisions narrowed due diligence and reporting scope primarily to Tier 1 suppliers.

• This change was justified to make implementation more feasible in the short term. However, it raises concerns for ESG leaders in fashion, where Tier 2–4 suppliers often hold the most risk and social impact, especially related to labour rights and environmental degradation.

Ultimately, the European Commission’s recent revisions to the Corporate Sustainability Reporting Directive (CSRD) are rooted in both political and practical concerns.

Post-Omnibus: A New Reporting Reality for Fashion Companies

The EU calls it a “simplification,” which indicates that the original language and requirements were too complex. But the revisions and updates aren’t any less (or more) complex — rather, changes were about being responsive and sensitive to the very real world challenges and context we discussed above.

Think about it this way: reducing the obstacles to adoption increases the likelihood of social compliance.

One of the main things ESG managers should note is that the revisions don’t necessarily make things easier. But they do adjust factors like timelines, reporting thresholds, the scope of information collected, and more.

According to CSR Europe, the European Commission's 2025 Omnibus Simplification Package has ushered in significant changes to the Corporate Sustainability Reporting Directive (CSRD), reshaping the sustainability reporting and information landscape for fashion companies. These revisions aim to reduce administrative burdens while maintaining the EU's commitment to sustainability goals.

The EU's Omnibus package introduces several key adjustments to the CSRD:

Increased Reporting Thresholds

• The employee threshold for mandatory reporting has been raised from 250 to 1,000 employees, and the net turnover threshold for non-EU companies has increased from €150 million to €450 million. 

• This change is expected to exempt approximately 80% of previously in-scope EU companies, including many small and medium-sized enterprises (SMEs).

Delayed Implementation Timelines

• New requirements for the Corporate Sustainability Reporting Standards have now postponed certain EU companies' reporting deadlines. 

• For instance, “Wave 2” companies, initially required to report in 2026, will now report in 2028, providing additional time to prepare compliance information to meet what the CSRD requires.

Limited Value Chain Data Requests

• Based on what the CSRD requires, companies are now restricted from requesting extensive sustainability data and information from business partners with fewer than 1,000 employees, except in high-risk cases. 

• This aims to reduce the reporting burden on smaller suppliers as they transition to the Corporate Sustainability Reporting Standards.

These changes reflect the Commission's efforts to balance the need for sustainability reporting with the practicalities of business operations, particularly for companies with limited resources.

Harmonization, Not Expansion: What Changed for Reporting Standards

In addition to scope and timeline adjustments, the Omnibus package brings significant changes to the European Sustainability Reporting Standards (ESRS):

• Reduction in Mandatory Data Points: The number of required data points has been decreased, with a focus on prioritizing quantitative data over narrative text. This streamlining is intended to simplify reporting processes and enhance clarity.

• Elimination of Sector-Specific Standards: Plans to introduce sector-specific ESRS have been abandoned. Companies will now adhere to sector-agnostic standards, promoting consistency across industries.

• Maintenance of Double Materiality Principle: Despite other changes, the principle of double materiality remains intact. Companies must still report on how sustainability issues affect their business and how their operations impact society and the environment.

The revisions to the Corporate Sustainability Reporting Standards aim to harmonize reporting standards, making them more manageable for companies while preserving the integrity, objectives, and information communciated by sustainability reporting.

Strategic Sustainability Leadership: 5 Steps to Operationalize CSRD Compliance

As the CSRD evolves, fashion brands must move beyond checkbox compliance and embed sustainability into their core operations. The following five steps, illustrated with real‑world examples, will help ESG managers turn the regulatory requirements of the Corporate Sustainability Reporting Directive into strategic advantages.

Step #1: Moving from Risk Mitigation to Business Opportunity

Treating CSRD purely as a risk‑management exercise limits its potential. Leading companies reporting under CSRD are reframing mandatory disclosures as a source of strategic insight—surfacing new product innovations, cost‑savings, and brand‑building opportunities. By shifting the narrative from “we have to report” to “we want to learn,” organizations unlock fresh data‑driven initiatives that drive both sustainability and the bottom line.

“Seeing CSRD as a compliance exercise is a missed opportunity. If a company starts to seriously report according to the CSRD guidelines, they will get so much inspiration on what they can do differently and better.” — Thomas Tochtermann, Chairman of Global Fashion Agenda

How ESG managers can adopt for better reporting under CSRD

• Conduct a double‑materiality assessment to identify both risks and value‑creation opportunities across your value chain. 

• Prioritize quick wins — like mapping Scope 3 emissions by supplier — to build momentum and business cases for further investment.

Step #2: Embedding ESG Disclosures into Brand Identity and Governance

Sustainability reporting should be more than an annual spreadsheet — it must live in boardroom discussions, product design briefs, and customer communications. Embedding ESG metrics into governance structures ensures decisions at every level are informed by environmental and social impact, while weaving transparency into your brand story builds credibility with consumers and investors alike.

“All companies will have to go through the requirements [of CSRD reporting] and figure out the data points that make sense for them to report on,” says Mads Twomey‑Madsen, VP of Corporate Communications and Sustainability at Pandora.

How ESG managers can adopt for better reporting under CSRD

• Create an ESG steering committee at the board level and appoint ESG champions in each business unit. 

• Use customer‑facing channels (e.g., product labels, digital platforms) to share key performance indicators, reinforcing your commitment to stakeholders.

Step #3: Reporting to Comply vs. Reporting to Compete

The shift from compliance‑only reporting to market‑making transparency empowers brands to differentiate themselves. By packaging CSRD data into compelling narratives—like digital product passports or interactive dashboards—forward‑thinking companies transform static reports into dynamic tools for consumer engagement, investor relations, and premium positioning.

According to Vogue Business, luxury label Gabriela Hearst’s partnered with EON to include QR‑code–linked “digital identity” assigned each garment, giving consumers access to material origins, carbon footprint, and end‑of‑life options — turning transparency into a selling point.

How ESG managers can adopt for better reporting under CSRD

• Leverage CSRD data to create product‑level storytelling. 

• Integrate digital IDs or eco‑score labels on e‑commerce sites to elevate brand trust and justify premium pricing.

Step #4: Building Resilient Supply Chains Through Transparent Disclosures

Comprehensive reporting demands under ESRS call for visibility into every tier of your supply chain — from raw‑material extraction to final assembly. Transparent disclosures fulfill CSRD requirements and help brands identify vulnerabilities, collaborate on improvements, and build partnerships that strengthen resilience against disruptions and reputational risks.

According to Teen Vogue, French sneaker brand Veja exemplifies this approach by sourcing organic cotton, natural rubber, and leather directly from farmers in South America. This transparent model ensures fair treatment and sustainable livelihoods for all participants in their supply chain.

How ESG managers can adopt for better reporting under CSRD

• Initiate direct partnerships with suppliers at various tiers, focusing on ethical sourcing and sustainable practices. 

• Implement systems to trace materials from origin to finished product, and collaborate with suppliers to promote fair labor and environmental standards. 

• Roll out phased supplier onboarding: start with top 10 raw‑material partners, deploy digital questionnaires, and establish data‑sharing agreements. 

• Use and include the insights to co‑develop improvement plans and KPIs with your suppliers.

Step #5: Preparing for Independent Audits: Raising Internal Reporting Standards

As the CSRD moves toward mandatory third‑party assurance, internal controls must withstand scrutiny. Early preparation — through robust documentation, clear data‑ownership roles, and trial audits — ensures that when external auditors arrive, your data is readily verifiable and your processes transparent, reducing the risk of compliance failures or reputational damage.

The Good.Lab’s Audit Readiness Guide provides a helpful place to start with adoption: Best practices include early gap assessments against ESRS, standardized data‑collection templates, and assigning clear ownership for each data point well before external review.

How ESG managers can adopt for better reporting under CSRD

• Simulate a “dry‑run” audit six months before your first external assurance. 

• Document processes, retain evidence for each metric, and include information from your internal audit function (or an external consultant) to validate readiness.

The Call to Action: Fashion’s Role in Shaping Europe’s Sustainable Future

For ESG managers navigating the CSRD’s revisions, stakes are high: disclosure expectations are now even more rigorous, external assurance looms on the horizon, and cross-functional alignment is no longer optional. 

Yet with these challenges come immense strategic advantages for brands willing to lead. And early movers like Gabriela Hearst, Veja, Pandora, and others, are already operationalizing principles like:

• Digitizing product data information

• Tightening supplier traceability

• Publishing science-aligned targets that extend well beyond current requirements

Which leaves us wondering: has the information we've learned so far given us any valuable insights for future shifts? 

Three significant takeaways emerge and they’re worth noting for fashion brands that need to avoid future compliance risks and build the organizational muscle and reputational capital envied by late adopters.

Key takeaway #1

The European Commission’s decision to streamline rather than expand ESRS scope signals a desire to align sustainability reporting with existing business realities, rather than overwhelm them with the need to include new information they may not be equipped to track — yet.

This gives ESG managers breathing room to focus on data quality over volume and encourages more brands — especially SMEs — to engage with CSRD requirements. It shifts the tone from overload to opportunity and makes implementation more manageable across departments.

Key takeaway #2

Embedding ESG disclosures into brand governance, product design, and supply chain strategy is a good thing because it enables companies to transform data collection into an engine for resilience and innovation.

When ESG becomes embedded in decision-making—not retrofitted later—brands gain early visibility into risks and opportunities. ESG managers can build stronger business cases for sustainable materials, lower-impact logistics, or supplier development programs that deliver measurable ROI.

Key takeaway #3

Treating CSRD as a competitive differentiator through digital IDs, transparent sourcing, and investor-grade reporting positions brands to lead, not follow.

And because ESG managers are under pressure to prove value through information, turning transparency into a brand asset not only meets stakeholder demands but also drives customer trust, investor interest, and internal alignment. Sustainability teams will always need to justify budget and board-level support by linking reporting to growth — and this tracking-and-reporting will only support their ability to do so, long-term.

Reporting is what it really comes down to: a brand’s capacity to commit to reporting and its mindset and perception around what it can enable within the business sits at the core of the European Green Deal’s vision — and that’s by design. 

So when the stated goals of the CSRD updates are priorities like decoupling economic growth from resource use, restoring biodiversity, and achieving carbon neutrality by 2050, the ultimate outcome we’re aiming for is seismic in impact and much larger in size: a shared foundation for policy-making, capital allocation, and innovation markets and countries.