Beyond CSRD and Omnibus: why sustainability remains strategically important for businesses
- Christine Bang Kragelund
- 16 hours ago
- 4 min read
The sustainability agenda’s staying power
The recent European debate about simplifying companies’ sustainability reporting has led some to suggest that the sustainability agenda has been cancelled. That interpretation is misleading. The Corporate Sustainability Reporting Directive (CSRD) was never intended as an end in itself, but as a means to increase transparency and comparability, and ultimately to steer capital flows towards more sustainable business models. The European Commission’s “Omnibus” proposal to streamline reporting should therefore be understood as an adjustment of method-not a retreat from ambition. As lengthy reports of more than 100 pages have proved hard to digest or have failed to deliver decision-useful information commensurate with the resources required, a stronger focus on comparable, quantitative data may be a sensible step forward.
It is also important to remember that sustainability practice did not begin with CSRD. Long before the Directive, companies engaged in environmental reporting, optimised their production processes, and strengthened supply chains to address relevant challenges. It is therefore strategically short-sighted to assume that sustainability will become less important if a company falls outside the regulatory scope. Boards and executives should remind themselves why they engaged in the first place-typically because sustainability is anchored in the company’s long-term strategy and relevance.
That link to the business fundamentals remains central. Sustainability is driven not only by regulatory pressure, but also by physical necessity and strategic foresight. Companies must ask themselves how they will operate over the coming decade if structural risks materialise: higher temperatures, sea-level rise, reduced access to clean water, more frequent extreme weather events, resource dependence on a small number of suppliers, rising carbon taxes, and increased demand for recycled materials. Each of these dynamics affects the company’s value as an investment case. Where there is a lack of clarity on such questions, the company’s valuation is at risk.
The geopolitical dimension strengthens this further. If Europe eases off, other regions will take the lead. Two risks are particularly clear. First, global standards may develop without European influence if Europe does not maintain its engagement, potentially forcing European companies to adapt to frameworks they had no say in shaping. Second, regions such as China, Japan and Australia are investing heavily in reporting systems and sustainability standards. A European slowdown could therefore reduce access to markets, partnerships and capital. China is a good example: in 2024, the country launched its own sustainability standards (CSDS), alongside a national climate standard earlier in the year. This signals that China views sustainability as a strategic tool for future competitiveness-just as it has strengthened its grip on critical minerals and key technologies such as batteries and solar panels at the centre of the green transition.
Corporate reporting as a strategic resource
Published CSRD reports are valuable sources of strategic knowledge in their own right. Large companies have invested heavily in mapping risks and opportunities across sectors and geographies. Even companies outside CSRD’s scope can learn from these insights and apply them in their own decision-making-and they should.
When analysing reports across sectors, several patterns emerge. First, variation in reported topics is both expected and desirable, as material issues differ between industries. For example, companies in consumer goods and transport operate under very different environmental and social conditions, and the data considered material varies accordingly. Second, embedding sustainability in the organisational structure is crucial. Effective progress requires measurable targets, clearly defined responsibilities and incentive mechanisms. Many companies have only recently, in 2023 or 2024, introduced sustainability-related KPIs into executive remuneration, underlining the ongoing evolution of the sustainability agenda.
Another notable observation is the inclusion of scenario analyses and forward-looking risk assessments. These elements are particularly relevant to strategic decisions. For example, Pandora’s 2024 report highlights the rapid transformation of the diamond industry through laboratory-grown alternatives. These diamonds, which are chemically and physically identical to mined diamonds, are produced using renewable energy and have only 5% of the carbon footprint. They already account for 20% of the global market-a sharp rise from under 1% in 2015. This development is shaping consumer expectations and value chains. For jewellery manufacturers, both within and outside CSRD’s scope, such insights should trigger board-level strategic debate about future sourcing and product portfolios.
Novartis is another example, linking climate change directly to disease patterns. Scenario modelling shows potential declines in sales of medicines for heart disease and asthma due to improved air quality, while demand for lung cancer treatments may fall in the US and EU but rise in Asia, Africa, Australia, Canada and Latin America. Scenario analyses can illuminate not only environmental risks, but also shifts in market needs. Other companies should take inspiration: what implications does the rise of electric vehicles have for health patterns in cities? Or how will climate change alter customer needs and preferences across industries? The strategic opportunities are many-but only visible to those who actively work with such future scenarios.
From compliance to strategy: the future of sustainability in business
The turbulence of 2025 has revealed how fragile it is to view sustainability purely as a reporting burden. The physical and systemic challenges-climate change, water scarcity, pollution and limited access to critical resources-remain unavoidable. The logical conclusion is that companies must elevate sustainability into a strategic priority, integrated into the core business and not merely housed within the compliance function.
In practice, this means setting measurable targets, optimising value chains, investing in efficiency, and designing products and services with this in mind. To prepare effectively, leadership should work with four key questions:
What transformations are under way, and which underlying dynamics define them?
How are supply chains, stakeholders and risks evolving?
Where are the company’s vulnerabilities, and where do new opportunities emerge?
What will the business model look like under these-and potential future-conditions?
Answering these questions requires moving beyond seeing sustainability as reporting. It requires proactive integration into corporate strategy, capital allocation and market positioning. Those who succeed will not only comply with shifting regulations, but also shape the markets and investment flows of the future.
