Brussels’ flagship sustainability law, the CSRD, is caught in a EU political crossfire, Luxembourg included, triggering confusion, Omnibus exemptions and regulatory backpedalling. Norton Rose Fulbright’s Claire Guilbert and Cyril Clugnac explain.
The Corporate Sustainability Reporting Directive (EU) 2022/2464 (CSRD) was introduced as a cornerstone of the European Commission’s Action Plan on Financing Sustainable Growth. However, its implementation has become a source of contention, sparking considerable debate and reflecting the complexities of the EU’s regulatory and political landscape. To date, the policy making process around the CSRD is akin to taking one step forward and two steps back.
Originally proposed on 21 April 2021 to amend Directive 2014/95/EU on non-financial and diversity disclosures by certain large undertakings and groups, the CSRD was formally adopted as Directive (EU) 2022/2464 on 14 December 2022.
Growing criticism
While the CSRD initially enjoyed broad support, it now faces growing criticism amid changing economic and political conditions.
EU Member States were given until 6 July 2024 to transpose the CSRD into national law. As of early 2025, 17 Member States had yet to meet this deadline, including (still today) Luxembourg where Prime Minister Luc Frieden had publicly considered delaying transposition, prompting the European Commission to initiate infringement procedures against Luxembourg.
Concerns over costs and complexity
The delays and resistance to implementing the CSRD reflect broader concerns about its complexity and the significant compliance costs it imposes, as well as questions about its impact on global competitiveness. There are concerns that achieving sustainability objectives should not be at the expense of a country’s economic vitality. A position echoed by some EU’s heavy weights, France and Germany having both advocated for more proportionality in the EU’s ambitions and, more recently, the outright abolition of the CSRD’s close relative “CS3D” (Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence).
Stakeholders across the EU have voiced concerns about the CSRD’s practical challenges, urging the EU Commission to simplify it, ease its obligations on companies in scope and to take time to avoid major shortcomings and misalignments.
In response, the European Commission introduced the “Omnibus Package” on 26 February 2025, proposing to reduce the CSRD’s scope by exempting approximately 80% of companies previously in scope of its requirements. This move aligns with broader efforts to streamline EU regulations and enhance competitiveness. Additionally, Directive (EU) 2025/794, adopted on 14 April 2025, formally postponed the CSRD’s reporting deadlines.
Unfortunately, these developments have created ambiguity (if not uncertainty) and inconsistency (if not inequality) across Member States, as some had already transposed the CSRD and some had already imposed reporting requirements on companies in scope that may no longer be needed under the new framework.
Fragmented regulatory landscape
The divergence in national approaches to the CSRD has led to a fragmented regulatory landscape, with smaller companies seeking relief from its compliance burdens, while larger firms - many of which have already invested so as to be CSRD-ready - expressing concern over the potential dilution of the CSRD’s impact.
As stated above, in Luxembourg, the original CSRD has not yet been transposed, and the legislative process around it remains ongoing. Bill 8370 is undergoing amendments which we hope will anticipate the changes to be introduced by the Omnibus Package so as to avoid further contradictions and finally bring clarity to the market on what will be required in Luxembourg and by when. In the meantime, we can only hope for indulgence for those who are uncertain in how to implement equally uncertain requirements.
Claire Guilbert, partner and global co-head of funds and asset management, and Cyril Clugnac, senior associate, are with Norton Rose Fulbright, a member of the Investment Officer panel of experts.