KPMG warns US companies still face evolving EU sustainability rules

KPMG is telling US companies with Europe exposure that the latest EU sustainability reset is not a reason to stand down. It is a reason to redraw the workplan, because the simplified rules still leave real reporting and due diligence obligations on the table for companies caught by the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive.

The firm’s May 8 update said the Omnibus changes have sharply reduced the number of companies in scope, but they have not erased the regime. For KPMG’s sustainability, advisory and audit teams, that means the question is no longer whether the framework will change. It is which entities still fall inside it, what disclosures still have to be built, and how much of the old reporting architecture can be reused without creating control problems later.

The European Commission opened public feedback on revised European Sustainability Reporting Standards and a voluntary sustainability reporting standard on May 6, with comments due by June 3. That consultation matters for KPMG teams because it keeps the implementation window open while clients decide whether to press ahead, slow down, or redesign their internal reporting calendars. The Commission said it will adopt the two delegated acts as soon as possible after the consultation closes.

One of the most consequential changes is the draft “value chain cap,” which would stop CSRD in-scope companies from asking value-chain partners with 1,000 employees or fewer for information beyond the voluntary standard. The Commission said that voluntary standard is based on EFRAG’s 2024 VSME. For multinational groups, that could reduce pressure on suppliers, but it also forces reporting teams to rethink data requests, internal controls and how far sustainability disclosures can depend on information gathered from smaller counterparties.

The legal reset is already under way. The Council of the European Union gave final approval to the simplification package on February 24. Directive (EU) 2026/470 was published in the Official Journal on February 26 and entered into force on March 18. EFRAG submitted its technical advice on simplified ESRS on December 3, 2025, after consultation and field testing, and the Commission’s latest round of feedback now sits on top of that work.

For KPMG professionals, the practical message is clear: companies should not treat lower scope as a green light to wait. The work now is to reassess scoping thresholds, rebuild reporting strategies, and decide which governance, evidence and disclosure processes can pause and which cannot. In a market that often freezes when regulation gets simplified, the bigger risk is assuming delay is the safe option when the next compliance cycle is already taking shape.