Regulatory Relief Under Uncertainty: Market Reactions to the EU's Omnibus CSRD Reform

This article investigates the stock market reaction to the European Commission's Omnibus package, released on 26 February 2025, which seeks to amend the Corporate Sustainability Reporting Directive (CSRD). To explore whether investors interpret this proposal as a regulatory relief or as a signal of heightened policy uncertainty, we conduct an event study on 3292 publicly listed European firms. The release was not associated with the positive reaction expected by the Commission. The evidence points instead to a negative, though modest, reaction. This may reflect uncertainty about the announcement and its timing, close to the first reporting date, which left compliance costs sunk. The most negative reactions concentrate among firms most exposed to uncertainty and compliance investments, and among firms in countries that had already transposed the CSRD into national law. These findings underline the need for clear, coherent and credible rules regarding European sustainability regulatory framework.