In February 2025, the European Commission adopted the Omnibus Initiative, a sweeping revision of sustainability reporting regulations under the Corporate Sustainability Reporting Directive (CSRD). While the legislative package is still awaiting European Parliament approval and national transposition, its early effects are already rippling through real estate, finance and sustainability circles.
Three months in, the message is clear: although the bureaucratic burden has decreased for many, the market’s expectations around ESG performance are rising, not falling.
What changed: CSRD scope significantly narrowed
One of the most headline-grabbing changes in the Omnibus Initiative is the dramatic narrowing of CSRD applicability. Roughly 80% of companies originally subject to mandatory sustainability reporting have been exempted. In Romania, the number of companies required to comply has dropped from 6,000 to just 300.
SMEs listed on stock exchanges have been removed from CSRD obligations, with the focus now centered solely on large companies, those with over 1,000 employees, more than €50 million in turnover, or over €25 million in assets.
However, this doesn’t mean ESG reporting is going away. Quite the opposite.
Market pressure replaces regulatory mandate
For small and medium-sized companies, regulatory pressure may have lifted, but market pressure is replacing it. Large companies will continue to report, and they will likely pass ESG expectations downstream to their partners and suppliers. The European Commission is even introducing a voluntary, simplified ESG reporting standard for SMEs( VSME), giving larger firms a standardized tool for requesting sustainability disclosures across their supply chains.
In real estate, this trickle-down dynamic is already visible. Major corporate tenants are starting to demand that office, logistics, and retail spaces comply with sustainability rigor. Without such alignment, building owners may find themselves locked out of high-value leasing opportunities.
On the residential side, consumer demand is pushing developers toward healthier, more energy-efficient and environmentally conscious homes, with or without regulatory compulsion.
Financing is still ESG-first
Despite the deregulatory approach of the Omnibus Initiative, the EU Taxonomy remains the key regulatory driver for sustainable finance. Banks and institutional investors continue to prioritize projects aligned with ESG criteria, offering tailored financing solutions for sustainable real estate. As a result, the financial sector actively reinforces ESG performance standards, guided by both market demand and regulatory requirements.
As a result, developers who voluntarily align with sustainability goals and adopt green certification standards maintain a competitive edge—not just in securing financing, but also in attracting tenants, buyers, and investment partners.
Opportunity, not regression
It’s important to frame the Omnibus Initiative not as a step back from ESG, but as an opportunity for efficiency and strategic alignment. The Paris Agreement’s targets, particularly the 55% reduction in emissions by 2030, remain a north star for most industries. Failing to align with these climate goals is no longer just a reputational risk, it’s a strategic disadvantage.
What developers and investors must do now
In this evolving landscape, real estate professionals should consider the following strategic actions:
- Align voluntarily with ESG reporting frameworks, even if not legally required.
- Pursue green certifications for projects across all asset classes.
- Audit portfolios and new developments for decarbonization opportunities.
- Educate supply chain partners, especially SMEs, on voluntary reporting standards.
- But the most relevant – Stay ahead of demand by incorporating occupant wellness, energy efficiency and ecological impact into project planning.
