ESG reporting after Omnibus: Why companies shouldn't stop now

Just as businesses were finding their feet with ESG reporting, the EU Omnibus proposal threw a curveball, likely loosening mandatory reporting requirements for thousands of mid-market companies. For many, this raises the question: Is ESG reporting still worth the effort?

The short answer is yes. In fact, ESG reporting is more important than ever.

While Omnibus may reduce administrative burdens, it doesn’t lower the bar for what investors, customers, or corporate buyers expect. Companies that continue disclosing sustainability data voluntarily will not only stay ahead of future compliance but also strengthen investor trust, remain competitive, and secure access to capital.

And companies know it. In our recent 2025 Post-Omnibus Market Pulse Report, based on insights from over 250 mid-market and enterprise organizations, 90% say they plan to continue ESG reporting, even if it’s no longer required. For many, it’s a strategic move to manage risk, win business, and position themselves for long-term success.

Drawing on insights from across the market, this article breaks down why ESG reporting still matters, what’s changed under Omnibus, and how businesses can use frameworks like the Voluntary Sustainability Reporting Standard for SMEs (VSME) to keep momentum and stay relevant.

Quick recap: What is ESG reporting and why does it matter?

ESG reporting is the practice of disclosing how a company performs across environmental, social, and governance factors. From carbon emissions to human rights policies, this data gives stakeholders a clearer view of how a business manages its impact and risk.

While ESG reporting began as a regulatory requirement, it’s now much more than that. Investors use it to gauge long-term risk. Customers use it to choose suppliers. Employees and partners see it as a reflection of a company’s values and stability.

Done well, ESG reporting can help companies build credibility, trust, and long-term resilience.

ESG reporting beyond compliance: A competitive edge

ESG reporting has become a strategic tool for managing risk, securing financing, and staying competitive in increasingly complex supply chains.

In 2023, 98.6% of S&P 500 companies published ESG disclosures, up from just 20% in 2011. The shift reflects growing investor demand for transparency into how companies are managing environmental and social risks.

And the pressure is not limited to large businesses. Mid-market companies, even those outside CSRD scope, are being asked by large buyers to share ESG data. Without it, they risk losing access to contracts and long-standing business relationships.

Strong ESG performance is also linked to financial and operational benefits. A 2024 study published in ScienceDirect found that companies with solid ESG practices tend to achieve higher profitability and better risk management.

As regulations evolve, one thing is clear: market expectations are not slowing down. ESG reporting is a smart, practical investment in resilience and long-term relevance.

What changed under Omnibus?

Released on February 26, 2025, the Omnibus Proposal is designed to simplify EU sustainability rules and ease the compliance burden, especially for smaller businesses. 

While not yet final, the proposal outlines significant changes to key frameworks like the Corporate Sustainability Reporting Directive (CSRD), the EU Taxonomy, and the Corporate Sustainability Due Diligence Directive (CSDDD).

Here’s what’s on the table.

The proposal is still just that: a proposal. It must be reviewed by both the European Parliament and Council before anything becomes law. But for many businesses, it’s already prompting a shift in how they think about ESG reporting, and introducing a fair amount of uncertainty. 

According to our research, 46% of organizations are still evaluating what Omnibus means for their reporting obligations. Even so, most companies aren’t stepping back: 67% plan to continue CSRD reporting, 40% voluntarily and 27% because they remain in scope.

Introduction of the VSME: A new voluntary pathway

Alongside loosening requirements, the Omnibus also pointed to a new path: the VSME. Though the VSME had been in the works since early 2024, its release in December 2024 and inclusion in the Omnibus package positioned it as the go-to framework for companies no longer under the CSRD.

In fact, as seen in the above graph, our research found that 14% of companies previously under scope of the CSRD say they plan to transition to the VSME.   

Why make the switch? The VSME offers a simplified, structured alternative to ESG reporting for companies with fewer than 1,000 employees. It helps businesses focus on material topics, reduce complexity, and align with broader EU goals, without the heavy burden of full CSRD alignment. 

Plus, since the VSME and the European Sustainability Reporting Standards (ESRS) are aligned, businesses can always step up to the CSRD later if requirements or stakeholder demands change.

Why companies should keep reporting voluntarily

While regulations may change, expectations from the market aren’t going anywhere. Here’s why it’s risky to pause ESG reporting now.

1. Investors still demand ESG transparency

Investors and lenders, from private equity firms to banks, are actively using ESG metrics to assess risk and allocate capital. Morgan Stanley’s 2024 Sustainable Signals report found that nearly 80% of global investors consider environmental reporting, including emissions reduction targets, a key factor in decision-making.

And businesses feel that pressure too. Our data shows that 85% of businesses believe voluntary ESG reporting is important to stakeholders like investors, 59% seeing it as moderately important, while 26% saying it’s highly important.

Without credible data, your business risks falling short of investor expectations, or missing out on financing altogether. Voluntary ESG reporting signals maturity and governance readiness, two qualities investors look for, even when disclosure isn’t mandatory.

2. ESG risks are business risks

Whether it’s exposure to climate events, supply chain disruptions, or reputational fallout, ESG issues are tied directly to business performance and resilience. That’s why many companies are choosing to keep reporting, even if they don’t have to. 

Our data shows that 33% will continue because it aligns with their long-term strategy and sustainability goals. Another 28% want to stay ahead of future regulations, and 13% say ESG reporting is critical for maintaining credibility with investors, lenders, and business partners.

Failing to measure and report ESG risks can leave companies blindsided. Voluntary reporting ensures you’re identifying, managing, and communicating these risks effectively.

3. Supply chain buyers still require sustainability data

Large buyers are under increasing pressure to disclose the ESG performance of their entire value chain. That means they’re asking suppliers, many of whom fall outside CSRD scope, for ESG data anyway.

As seen in the above graph, our research shows that 7% of companies are continuing ESG reporting specifically to meet supply chain requirements from larger companies. This trickle-down effect means that many mid-market companies must still provide sustainability disclosures to maintain business relationships. 

If you can’t provide this information, you risk being replaced by competitors who can.

4. Competitors that keep reporting will gain an edge

Voluntary ESG reporting is quickly becoming a meaningful differentiator in today’s market. Companies that proactively share their ESG practices are seen as responsible, forward-looking partners, signaling operational maturity and a commitment to long-term sustainability. 

And all of that is good for business. Companies with strong ESG performance tend to see higher firm value and profitability.

On the other hand, companies that step back from ESG reporting risk being viewed as unprepared or lacking transparency. As voluntary disclosure becomes the norm, the absence of such disclosures may raise doubts about a company’s credibility and long-term readiness.

Choosing the right framework based on business goals

The Omnibus proposal gives businesses more flexibility in how they approach ESG reporting. As a result, companies now have three main paths forward:

• Mandatory CSRD: Companies with more than 1,000 employees remain in scope and must continue aligning with CSRD requirements.
• Voluntary CSRD: Mid-sized companies committed to sustainability are choosing to stay on track, recognizing the competitive and financial advantages of CSRD alignment.
• VSME adoption: Smaller businesses are increasingly turning to the VSME, a practical, proportional alternative designed to keep ESG reporting structured without becoming burdensome.

The best choice depends on your industry, growth plans, and stakeholder expectations. For companies that want to stay proactive without getting bogged down in complexity, the VSME offers a clear and scalable path forward.

How to structure ESG reporting under VSME and CSRD

Regardless of whether you're reporting under the CSRD or VSME, structure matters. A clear, consistent approach helps build credibility, streamline internal processes, and meet stakeholder expectations.

CSRD reporting structure

If you're reporting under the CSRD, you'll need to follow the ESRS. Reports are typically structured into four key sections in the following order:

1. General disclosures (ESRS 2) – including company profile, governance, strategy, and the double materiality assessment.
2. Environmental topics (ESRS E1-5) – such as climate change, pollution, water use, circular economy, and biodiversity.
3. Social topics (ESRS S1-4) – including workforce conditions, diversity and inclusion, human rights, and community impact.
4. Governance topics (ESRS G1) – including anti-corruption, board structure, executive pay, and risk management.
   
   

Each topic must include disclosures on policies, targets, action plans, and performance metrics. CSRD reports are detailed, data-heavy, and often supported by external assurance, so it’s important to build cross-functional collaboration and robust data systems early on.

VSME reporting structure

If you're reporting under VSME, the structure is more lightweight but still standardized. It includes two levels of detail depending on your chosen module:

Basic Module
A high-level overview covering:

• General company information
• Environmental performance (energy use, GHG emissions, waste management)
• Social performance (workforce structure, wages, diversity, and safety)
• Governance (anti-corruption and compliance measures)
  

This module is typically structured as a short, standalone ESG statement, often 5 to 10 pages, focused on basic KPIs, policies, and outcomes.

Comprehensive Module
Expands on the Basic Module with deeper disclosures on:

• Business strategy and risk management
• GHG reduction targets and climate transition plans
• Detailed social and human rights policies
• Sector-specific ESG considerations
  
  

This report may mirror the structure of a simplified CSRD report, but with more flexibility. Companies often break it into clear sections by topic and use narrative plus quantitative data to communicate progress. 

Important to note: If you choose the Comprehensive Module for your ESG reporting, you must also include the Basic Module.

Regardless of framework, good ESG structure is about clarity, consistency, and relevance. Use headings that map to material topics. Be transparent about what you’re tracking and why. Explain your methodology. And show progress over time, ideally with year-on-year comparisons.

Future-proof your disclosures

Even if you’re not required to report now, that could change. Voluntary reporting puts you ahead of future regulation and helps build internal readiness. By starting now, you’ll avoid scrambling later, and you’ll already have the trust of your stakeholders.

How to simplify ESG reporting with automation

ESG reporting doesn’t have to mean more manual work. With the right tools, it can be faster, more accurate, and less painful.

Streamline data collection and reporting

Modern ESG software platforms like Coolset can:

• Automate data gathering across departments
• Map metrics to the right frameworks (VSME, ESRS, etc.)
• Generate reports with traceable, audit-ready data
  

This helps reduce time, human error, and spreadsheet chaos, so your team can focus on insights instead of formatting.

Ensure effortless compliance while staying ahead

Even if you’re not legally required to comply with the CSRD now, automating your ESG reporting ensures you're prepared if thresholds change, or if stakeholders demand more disclosure.

It’s the difference between scrambling to catch up and being ready to lead.

Reporting now means leading tomorrow

ESG reporting is no longer just about ticking regulatory boxes, it’s about staying competitive in a market where transparency, responsibility, and resilience matter more than ever.

Companies that continue reporting voluntarily aren’t overcommitting, they’re getting ahead. They’re building investor confidence, securing supply chain relationships, and proving they’re ready for whatever comes next.

Whether through the CSRD or VSME, structured ESG reporting is a smart move.

How Coolset can help

At Coolset, we support businesses with ESG reporting, whether you're continuing under the CSRD, switching to the VSME, or exploring another framework. Our platform automates data collection, streamlines reporting, and adapts as requirements change, helping you stay focused on the work that matters.

If you'd like to learn more, get in touch to see the platform in action.