Background policy resources

This page present background resources for the A-Track policy brief: Strengthening Europe’s competitiveness and resilience: Enabling reporting and disclosure on nature and better decision-making.

General context

A-Track and related EU policy

The proposal for A-Track was written in 2021-22 in response to a Horizon Europe call topic to better integrate biodiversity into public and private decision-making, including through the accelerated uptake of natural capital accounting and environmental footprinting.

Specific reference was made in the call text to the EU Biodiversity Strategy for 2030, a key initiative under the European Green Deal. This Strategy aims to put Europe's biodiversity on a path to recovery by 2030 by protecting nature and reversing ecosystem degradation.

The overarching aim of the European Green Deal, adopted at the start of the first Von de Leyen Commission in December 2019, is to make the EU the world’s first climate-neutral continent by 2050, transforming it into a modern, resource-efficient, and competitive economy with decouple growth and resource use.

With the second Von de Leyen Commission, following developments in the global and EU political context, the policy emphasis has shifted. The EU’s Competitiveness Compass, adopted in early 2025, aims to reignite Europe’s economic dynamism and global competitiveness by becoming the leading location for cutting-edge, clean products and services, guided by the principles of innovation, decarbonisation, and security. Notwithstanding this, The European Green Deal remains in place.

The Green Economy is outperforming the overall economy

Europe’s prosperity and resilience rely on the continuing expansion of the green economy. Europe's green economy is performing strongly, outperforming the overall economy in the growth of value added and employment. Green companies in Europe demonstrate significant growth, with some indices showing higher returns than the broader market over the last decade. [1]

This same trend is seen in competitors. China’s green economy is a major growth engine within its overall economy [2]. In the UK, the net-zero economy grew by a rate of over 10% from 2023 to 2024, around three times the rate of the overall economy. Moreover, the green economy has a significant multiplier effect – in the UK, for every pound generated by the net-zero economy, an additional £1.89 of gross value added. [3]

Nature’s decline undermines Europe’s economy and business resilience

Nature in Europe and worldwide – both the stocks of natural assets, and the flows of ecosystem services on which our societies and economies depend – is substantially degraded and continues to degrade further[4,5]. Over half of the world’s land area has suffered critical losses in the functional integrity of the biosphere and the oceans face similar biological degradation [6]. This creates growing physical risk and undermines resilience for businesses at all scales and across all sectors, and consequently for the wider European (and global) economy. Physical risk arising from damage to natural assets and decline in the flow of essential ecosystem services is increasingly financially material for businesses.

Assessing and managing impacts and dependencies on nature is vital to maintaining growth and resilience and can reduce harm to nature and enable nature restoration

Assessing and managing businesses’ impacts and dependencies on nature is a prerequisite for the transformation, resilience and competitiveness of the European economy.

Businesses increasingly recognize this and are increasingly assessing, reporting and disclosing their impacts and dependencies on nature and on the related risks and opportunities. This in turn helps businesses and investors make better decisions that improve business performance and return on investment while also benefitting nature. A wide range of resources exist to help businesses take action towards this nature positive future [7].

Mandatory requirements on companies to assess and report on impacts and dependencies on nature help create a level playing field

Mandatory requirements to assess and report impacts and dependencies on nature as laid down by the EU Corporate Sustainability Reporting Directive (CSRD), and requirements therein to report on financially material risks following European Sustainability Reporting Standards (ESRS) in line with IFRS standards, create a level playing field for businesses. They ensure that businesses assess, disclose and manage impacts and dependencies on nature in a consistent way, including across value chains. Mandatory requirements also enable alignment and practicality of frameworks, standards, methods and tools to embed consideration of nature in business and investor decision-making.

Beyond CSRD, these mandatory requirements include financial reporting requirements under the Accounting Directive 2013 and Regulation 2023/1803 adopting international accounting standards.

Continued EU leadership on sustainability reporting is vital to deliver on EU ambition

Continued EU leadership on transforming business and finance through consideration of impacts and dependencies on nature is vital to deliver on ambition of the EU’s overarching goals relating to competitiveness, security and sustainability.

There is a need to reduce the reporting burden, while ensuring that reporting delivers vital decision-relevant information

Some companies have found elements of the CSRD requirements for sustainability reporting (such as the large number of data points) onerous. Smart simplification can ensure that corporates and investors still gather the information they need to make better nature-related decisions that enhance business resilience, resilience of the European economy, and the protection and restoration of nature. See below for further information on the draft standard ESRS E4 which details the planned simplification of biodiversity data points.

CSRD, Omnibus I, and reactions from business and finance

The Corporate Sustainability Reporting Directive

The 2022 Corporate Sustainability Reporting Directive (CSRD, Directive (EU) 2022/2464) sets out rules which require large companies and listed companies to publish regular reports on the social and environmental risks they face, and on how their activities impact people and the environment. This helps investors, civil society organisations, consumers and other stakeholders to evaluate the sustainability performance of companies, as part of the European Green Deal. The first companies subject to the CSRD have to apply the new rules for the first time in the 2024 financial year, for reports published in 2025. Companies subject to the CSRD have to report according to European Sustainability Reporting Standards (ESRS). The standards are developed in a draft form by the EFRAG, previously known as the European Financial Reporting Advisory Group, an independent body bringing together various different stakeholders.

CSRD was originally adopted because the EU believes that consumers and investors deserve to know the sustainability impact of businesses. Low-quality sustainability reporting can have cascading effects, particularly in terms of promoting sustainable investments. To ensure the market for green investments is credible, investors need a clear picture of their investment portfolio’s sustainability impacts. High quality and reliable public reporting by companies will help create a culture of greater public accountability. Thus, the CSRD was created with the goal of improving disclosure and providing the data investors need when determining a company’s sustainability.

Importantly, the CSRD requires ‘double materiality’ which means that businesses have to disclose not only the risks they face from a changing environment (climate, nature) but also the impacts they may cause to the environment and to society.

The Omnibus I Package

The European Commission’s proposals

The Omnibus I Package, introduced by the European Commission on February 26, 2025, is a comprehensive reform initiative aimed at simplifying and streamlining the European Union's sustainability regulations.

A key component of the Package is COM/2025/81 final, which proposes a Directive amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting and due diligence requirements. This proposal is now proceeding through co-decision by the Council of the European Union and the European Parliament (EP). JURI (EP Committee on Legal Affairs) agreement is scheduled for 13 October 2025 and the EP Plenary vote is scheduled for 31 October 2025.

Key aspects of the EC’s proposals in relation to CSRD

The EC proposes simplifying CSRD by:

Limiting its scope to companies with >1000 employees and >50M turnover or >25M balance sheet. This compares with the original CSRD scope of >500 employees (EU and non-EU companies) and EU companies with at least two of the following: >250 employees, >€50mn net turnover, >€25m assets. While CSRD currently captures c. 50,000 companies, the proposed changes would reduce this to c. 3500 companies.
Postponing CSRD implementation for Wave 2 & 3 companies (the so-called ‘stop the clock’ proposal)
In relation to the value chain, limiting information that companies can ask suppliers to VSME (the EFRAG voluntary sustainable reporting standard for micro-, small and medium sized non-listed companies, which is not well suited to larger companies)
Adjusting the assurance threshold from ‘reasonable’ assurance to ‘limited’ assurance
Making changes to Level 2 Standards, including reduction of ESRS Set 1 datapoints, and deletion of planned EU sector-specific reporting standards.

Council position in relation to CSRD (as at 9 October 2025)

On the CSRD, the Commission proposed to increase the employee threshold to 1000 employees and to remove listed SMEs from the scope of the directive. In its negotiating mandate agreed on 23 June, the Council added a net turnover threshold of over €450 million to further alleviate the reporting burden on undertakings. The Council’s mandate also introduces a review clause concerning a possible extension of the scope to ensure adequate availability of corporate sustainability information.

European Parliament – Legal Affairs Committee (JURI) position on the CSRD-related proposals (as at 15 October 2025)

JURI voted on 13 October employee threshold to 1,000 employees and a net annual turnover above €450 million. This would also apply to sustainability reporting under EU taxonomy rules.

For firms no longer covered by the rules, JURI voted for voluntary reporting in line with Commission guidelines. To prevent large companies from shifting their reporting duties onto their smaller business partners, these would not be allowed to request information beyond the voluntary standards. Sector-specific reporting would also become voluntary and existing sustainability reporting standards would be further simplified with a focus on quantitative information and on reducing the administrative and financial burden.

The Commission would also establish a digital portal for companies with free access to templates, guidelines and information on all EU reporting requirements complementing the European Single Access Point.

The European Parliament’s plenary vote is expected in the week of 20 October.

EFRAG consultation on ESRS data points

In March 2025, the Commission formally instructed EFRAG to revise the European Sustainability Reporting Standards (ESRS) through a delegated act, with the aim of substantially reducing the reporting burden (without weakening the CSRD’s objectives). The significant number of datapoints included in the initial set of ESRS has been an ongoing point of concern for stakeholders, alongside issues relating to the complexity of areas like the double materiality assessment process.

On 31 July 2025, EFRAG published the draft ESRS for public consultation with a deadline of 29 September. See here for more information on the consultation. EFRAG proposed to simplify the double materiality assessment, reduce narrative disclosures, improve readability, increase structural clarity, and enhance alignment with international standards, with a more than 50% reduction in mandatory / mandatory-if-material datapoints.

The draft standards relating to biodiversity are contained in ESRS 2, General Disclosures and ESRS E4, Biodiversity and Ecosystems. While the number of datapoints have decreased, the requirements have not weakened. Instead, they are easier to understand and align better with other major frameworks and initiatives, specifically the Taskforce on Nature-related Financial Disclosure (TNFD) and the Nature Positive Initiative’s (NPI’s) draft State of Nature metrics. See here for a more detailed analysis of the draft standards.

EFRAG’s final technical advice is due to be provided to the Commission by 30 November 2025, with the Commission expected to adopt revised standards via a delegated act in mid-2026, in time for financial year 2027 reporting (i.e., for reports published in 2028).

Selected reactions from business and finance

The Omnibus I proposals have elicited wide-ranging reactions from business and finance and from international organisations related to reporting and disclosure (see Annex). These highlight, inter alia, the importance of retaining key elements of CSRD, including:

The requirement for double materiality reporting – i.e. businesses should disclose not only the risks they face from a changing environment (climate, nature) but also the impacts they may cause to the environment and to society.
Scope: maintain sufficient scope to capture a sufficient critical mass of companies to inform the flow of investment to more sustainable business activities.
Value chain cap: retain requirements to report on data from companies in the value chain.
Key data points: retain key data points to allow for the assessment of impacts and dependencies on nature.

Links to selected reactions from business and finance are provided below:

Additional references

ECB (2024) Green and brown returns in a production economy. Working Paper Series no. 3030. PDF
https://www.bloomberg.com/news/articles/2024-01-25/china-s-green-economy-drove-40-of-gdp-growth-in-2023-crea-says
CBI (2025) The future is green – The economic opportunities brought by the UK’s net zero economy. PDF
https://www.eea.europa.eu/en/topics/at-a-glance/nature/state-of-nature-in-europe-a-health-check
IPBES Global Assessment Report on Biodiversity and Ecosystem Services
Stenzel et al. 2025. Breaching planetary boundaries: over half of global land area suffers critical losses in functional biosphere integrity. One Earth 8(8), 101393
See for example the Sector-specific guides published by Business for Nature, and WBCSD’s Roadmaps to Nature Positive.