How Procurement can Navigate EU ESG Regulation Changes
The evolving landscape of the EU’s ESG regulations is creating uncertainty for procurement leaders, especially after the proposals in the February 2025 Omnibus which aimed to delay implementation and narrow the scope of pivotal directives.
This has left many procurement professionals in the EU questioning future regulatory expectations, particularly with the possible renegotiation of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) originally set in place in 2024.
The evolving landscape of the EU’s ESG regulations presents significant challenges and opportunities for procurement leaders. Procurement teams are increasingly expected to embed ESG criteria into supplier evaluations, risk management and contract negotiations to ensure compliance with the expanding regulatory requirements.
Suppliers must now demonstrate transparent, verifiable sustainability practices, including detailed carbon accounting across their supply chains, ethical governance and adherence to environmental standards.
Failure to meet these expectations can impact supplier eligibility, contract renewals and ultimately the company’s market reputation.
Procurement thus becomes a critical function in managing ESG compliance, fostering supplier partnerships aligned with sustainability goals and mitigating risks associated with non-compliant or unsustainable suppliers.
Julien Denormandie, Chief Impact Officer at Sweep, has shared insights on what may be anticipated for these regulations. With extensive experience in governmental roles, including over five years in the French government, he offers a perspective valuable to procurement executives.
Proposed revisions and implications
Diverging views within the EU influence the decision-making process concerning regulation modifications.
For instance, the CSRD framework revision by the commission targets limiting mandatory compliance to businesses with more than 1,000 employees. However, this contrasts with the parliament rapporteur’s recommendation for a threshold of 3,000 employees, potentially reducing mandatory compliance from 50,000 to just 3,000 companies.
In addition, the CSRD could mandate compliance for organisations with more than 5,000 employees and a turnover exceeding US$1.7bn (€1.5 billion).
Julien says: “Discussions are ongoing in parallel on the revision of the CSRD framework (and the CS3D) and its implementing regulation, which sets out the reporting standards (the ESRS).”
For procurement teams, these potential changes mean re-assessing supplier thresholds, enhancing due diligence processes and improving data collection capabilities to monitor ESG performance effectively.
The shift in reporting requirements will necessitate greater collaboration with suppliers to gather validated sustainability data, particularly for Scope 3 emissions which span the full value chain. Procurement leaders should anticipate adapting supplier contracts to incorporate ESG requirements and prioritise working with vendors who demonstrate progress toward climate and social governance objectives.
Leveraging digital tools for supplier relationship management will be essential for scaling ESG compliance and ensuring transparency across complex supply networks.
Julien highlights a critical challenge: “The main challenge is finding the right balance between the need for reliable, comparable and useful reporting for the transition and the desire not to impose a disproportionate administrative burden on companies.”
Developments within ESRS
Efforts by Europe’s corporate reporting body, EFRAG, are focused on refining the 12 European Sustainability Reporting Standards (ESRS) to simplify compliance and reduce the data points companies need to report.
The proposed simplifications are under public consultation and will inform the Commission’s regulations.
Julien adds: “The full set of revised regulations (directives and delegated regulations) is expected to be finalised by June 2026.” However, implementation will vary, with initial CSRD reporting applying to early adopters in the 2024 financial year, while the subsequent wave faces a two-year delay, affecting reporting for the 2027 fiscal year instead of 2025.
Given the phased roll-out and evolving standards, procurement functions should use this period to build robust ESG data infrastructures and refine supplier engagement strategies.
Early action includes piloting supplier ESG questionnaires, training procurement staff on sustainability requirements and adopting technology platforms that enable real-time monitoring of supplier ESG metrics. These preparations will help smooth the transition once regulations come into full effect and reduce administrative burdens.
Active engagement with internal stakeholders such as legal, compliance and sustainability teams will also strengthen procurement’s role in driving enterprise-wide ESG commitments.
Strategic preparation for future compliance
- “Stop the clock” was implemented meaning companies in wave 2 and 3 will get an extra two years before needing to abide to the regulations
- The Council of the European Union adopted its position on the Omnibus package
- Under certain conditions wave 1 companies do not need to report on some ESRS standards: biodiversity, value chain workers, affected communities and consumers and end-users
- The VSME standard has been adopted by the European Commission
Procurement leaders should prepare for the finalised CSRD regulations post-parliament’s deliberations involving the Council and Commission.
Julien adds: “It’s wise to anticipate changes, train teams, engage with internal and external stakeholders and, if necessary, seek specialised advice.”
“Finally, it’s important to remember that the debate on the informational value and ambition of the CSRD will continue. Investors, civil society and regulators will be watching very closely the quality of the first streamlined reports.”
Sweep's role
Sweep serves as a sustainable data management platform, aiding businesses in achieving climate objectives by managing their procurement impact on sustainability.
Founded in 2020, with operations in France and the UK, Sweep offers software tools for climate impact management and adherence to current disclosure mandates.
Sweep’s services extend to carbon data tracking across supply chains and advising on compliance with evolving regulations.
Rachel Delacour, Co-Founder and CEO, says: “Every company is poised to disrupt the climate crisis and build a sustainable future. Those that take every possible action today will become the Forever Companies of tomorrow.
"Sweep provides the tools needed to tackle the complexities of sustainability data management, to accelerate climate action.”
