Sustainability reporting regulations at the crossroads. A critical note on the EU Omnibus

Purpose This study aims to focus on European Union (EU) regulations on sustainability reporting, which are currently equated with a build-up of bureaucracy, although potential chances of reporting for firms and stakeholders are rarely discussed. Design/methodology/approach This study includes a normative overview of the EU Omnibus with its major amendments of the Corporate Sustainability Reporting Directive (CSRD) and Taxonomy Regulation. Then, this paper reviews prior empirical research on the former Non-Financial Reporting Directive (NFRD), Taxonomy Regulation and CSRD, as well as their impact on corporate financial and sustainability outputs, through the lens of stakeholder and legitimacy theories. Finally, a critical assessment is made of the limitations of previous studies, the legitimacy crisis of the EU Commission and the implications for corporate sustainability transformation. Findings The sustainability reporting amendments of the EU Omnibus contrast with legitimacy and stakeholder theories, endanger the goals of the EU Green Deal project, lead to a massive legitimacy crisis of the EU Commission and reduce the possibility that corporate sustainability will go beyond the achievement of specific compliance levels. As regards EU sustainability reporting, the new thresholds for firms are a political compromise, achieved by lobbyism that lacks either empirical proven legitimacy or stakeholder inclusion. In view of the heterogeneous empirical results regarding the information value of NFRD reporting, the greater regulatory pressure of the CSRD and Taxonomy Regulation before the introduction of the EU Omnibus was justified. Originality/value To the best of the author’s knowledge, this is the first study of the EU Omnibus on sustainability reporting to connect the normative, theoretical and empirical aspects of the NFRD, CSRD and Taxonomy Regulation and critically reflect on their negative consequences for corporate sustainability.