13 mai 2026

An interview with Andreas Rasche, Professor of Business in Society and Associate Dean (Full-Time MBA), Copenhagen Business School.

In a wide-ranging conversation with honorary registered auditor Harry Everaerts and the Institute of Registered Auditors in Belgium (IBR-IRE), Andreas Rasche reflects on the direction of European sustainability regulation, the real implications of the Omnibus proposals, the consequences of narrowing the Corporate Sustainability Reporting Directive (CSRD) scope, and the emerging risks of a fragmented voluntary reporting landscape. He also offers practical guidance for boards and the audit profession, and shares a clear view on what is most needed to keep Europe’s transition credible: capital expenditure that actually drives the transition to a sustainable economy.

About Andreas Rasche

Andreas Rasche is Professor at Copenhagen Business School (CBS) and Associate Dean for the CBS Full-Time MBA Program. He has taught courses in the MBA and doctoral programs, chaired Executive Education programs, authored more than 60 academic articles and cases, and published seven books. He has collaborated with the United Nations (UN) and the World Health Organisation (WHO) on several projects and served on the UN Global Compact LEAD Steering Committee as well as Novo Nordisk’s Sustainability Advisory Committee. He joined CBS from Warwick Business School in 2012. More at: https://arasche.com  

The big picture: is Europe moving forward — or stepping back?

Asked whether the EU is still moving toward a stronger sustainability reporting framework or rather stepping back in ambition, Professor Rasche is blunt: in Europe, ambition has been reduced over the past 12 to 16 months as “simplification” increasingly translates into a narrower focus on large companies.

“We have taken a step back over the last 12 to 16 months due to the simplification process in the EU… [it] focus[es] mostly on larger companies, while the ambition before that actually was to make it much broader, to make it scalable.”

He adds that this shift also reflects a wider change in EU policymaking: rather than being anchored in a coherent long-term vision that was presented when the Green Deal was set up, decisions now increasingly respond to short-term pressure — including geopolitical realities and spillovers from the US political discourse.

“At the moment, the EU gives the impression as if they kind of give in very much to short term pressures… [The] long term vision that we had in 2019 with the Green Deal… I think this is gone. I think we are now in an environment where short term policy adjustments due to the geopolitical realities, are dominating the picture.   In addition, developments on the other side of the Atlantic also are not helpful. Since the Trump administration came in, which was in early 2025, and even before that, the US governmental institutions have put pressure on the EU to roll back some legislation mostly because they believe it is not proportionate towards US businesses.  And then of course, also the overall discourse that has changed in the US towards more polarization, a kind of politicization of some of the topics, such as climate change and diversity.  I think this has also to some degree spilled over to Europe here, not as bad as in the US, but it is a problem and it is certainly something that undercuts policymaking, that's for sure.”

Omnibus: technical simplification — or a fundamental shift in ambition?

The Omnibus proposals have often been framed as 'simplification.' But Professor Rasche argues what is happening goes beyond technical tweaks. In his view, Omnibus has lowered ambition levels not merely by adjusting reporting standards (which are Level 2 legislation), but by changing the directives (which is Level 1 legislation) — including the CSRD and elements linked to Corporate Sustainability Due Diligence Directive (CSDDD) and the EU taxonomy rules.

“There is definitely a lack of ambition or lower ambition levels through the omnibus… It is more than just technical simplification… we talk about… significant modifications to the directive itself and not just… changes to the ESRS.”

Professor Rasche also questions the sequencing: if the objective was simplification, why not start with the ESRS first?  Why not give companies time to learn from implementation experience?

“I never really understood why they did not just start with the ESRS and simplify there instead of… directly moving to the CSRD.”

Market impact: simplification too early creates confusion

A recurring theme is timing. Professor Rasche notes how quickly the major changes proposed to the legislation came - after not even one full reporting cycle - leaving companies without the opportunity to learn from implementation experience, which would allow much better to justify meaningful simplification. This, he argues, signals that the so called Omnibus 1 simplification project is deeply political.

“If you simplify something after not even 12 months of implementation, you do not have sufficient knowledge… to really simplify… in a way that would be meaningful.”

Narrowing CSRD scope: fewer companies reporting - bigger blind spots

The reduction in the number of companies in scope as per Content Directive has drawn most public attention. From Professor Rasche’s perspective, the key practical consequence is that the change is too generic. Based on calculations he references, the new thresholds imply a broad exclusion in the EU of around 90% of companies in scope, and this across all sectors — which inevitably creates blind spots where sustainability data matters most for transition planning but due to the specific set up and/or characteristics of companies in certain sectors, result in most of them, not longer being in scope of the CSRD.

“It is more or less a blanket exclusion of 90%… not very specific… [and] creates difficulties because you have some sectors where you really need information for the green transition, such as construction, real estate or agriculture.”

Why sector specificity matters

Professor Rasche argues the EU already has tools that could support a more targeted approach, rather than this new single  headcount threshold applied broadly.

“I would have personally welcomed… a more sector specific approach… The EU actually has the tools to do this… [but] there would have just needed the political will."

Country-level distortion and data gaps (especially for SME-based economies as Belgium)

While the reduction is significant everywhere, Professor Rasche stresses that smaller SME-based economies will face an even more sharper drop in mandatory ESG information flow to investors and policymakers. This could likely becomea practical challenge for targeted industrial policy (e.g., subsidies or tax incentives), which requires company-level data.

“In some of the smaller economies, almost none of the ESG related information will flow to the investors, at least not in a mandatory manner. You need company-level data. But if you don't have the data… this will be very difficult to do and have impact.”

ESRS versus other Standards

Although the CSRD mandates the ESRS to be interoperable with other global standards, notably the ISSB Standards, people wonder how these two frameworks will be developing in the future.  Professor Rasche is of the view that ESRS will be used only in the EU while the ISSB Standards will be applied more broadly in the worlds.   There are currently more than 40 jurisdictions which either have adopted the ISSB standards of have concrete plans to do so in the future.

“My hypothesis is that ESRS will remain rather restricted to application in Europe.”

Voluntary vs mandatory reporting: credibility, fragmentation, and greenwashing risk

If most companies fall out of mandatory scope, can voluntary reporting fill the gap? Professor Rasche says some will continue — but not all. He cites an estimate of around 42,000 exempted companies across Europe (under the new thresholds of 1,000 employees on average combined with an annual turnover of € 450 million)  and suggests 30–40% of these may still report voluntarily, driven by habit, stakeholder expectations, or pressure from business partners and banks.  

“It is around 42,000 companies that were exempted… Our own estimations are between 30 and 40 percent will continue to report on a voluntary basis.”

The central risk: a fragmented standards landscape

Professor Rasche’s biggest concern is fragmentation: companies choosing among many available reporting frameworks, i.e. voluntary use of the (simplified) ESRS, using the EC voluntary standard which was published on 6 May, (largely based on the Voluntary Standard for SMEs, the VSME), GRI, or even the Standards developed by the International Sustainability Standards Board (ISSB), making comparability much harder.

“It’s a quite fragmented standard world that we see post-omnibus.”

Assurance as a “currency” of trust

In such a fragmented landscape, Professor Rasche sees assurance as a way to reduce greenwashing risk and improve trustworthiness.

“With voluntary reporting without any assurance, you always have a higher greenwashing risk… I basically see assurance… as one way to kind of lower these risks… you need some sort of “currency” to ensure accountability and trustworthiness… [and] assurance is one way to do it.”

A pointed critique of the EU voluntary standard (meant to replace the VSME)

Professor Rasche also questions the credibility of stretching a standard originally recommended for companies below 250 employees to now cover companies below 1,000 employees with only limited changes to it.

“I do not think it is trustworthy… that almost 12 months since the date the EC promoted the use of the VSME for companies up to 250 employees, that more or less exactly the same standard suddenly should apply to all companies below 1000 employees.”

Will voluntary reporting be rewarded?

Professor Rashe thinks it will.  He believes in terms of voluntary reporting that the biggest drivers are the expectations of others.  Companies will move towards voluntary reporting for expectation reasons, i.e. if a business partner, if a bank, if an investor expects it. There will also be some companies that are more value driven, family owned companies, smaller companies, where the owners basically that  they want it regardless of whether there is some sort of market expectation.

And then in terms of the rewards, this depends quite a bit on the company context, but incremental revenues streams for companies which innovated themselves and their product and service offerings, or which realize significant product and production efficiencies (for example in using circularity principles) can experience a lot of rewards, including getting access to or better access to, loans and financing. Several studies show that financial institutions particularly consider emissions’ data in their risk calculations.   Probably the interests incentives spread should be bigger, but on the other hand, we also need to see it from their perspective. From perspective of the financial institutions, it is a pure risk calculation, and at the moment, the risks are not (yet) severe enough for them to price these higher. This will certainly change over the years, particularly with regard to climate change and companies being exposed to extreme weather events, supply chain disruptions, and so on. These things will be priced more into financial products.

“Important to realise that sustainability and profitability can go hand in hand, and realizing that, can create immense opportunities”

Reporting as strategy — not just compliance: three practical “proxies”

Professor Rasche has long argued that sustainability reporting should not become a box-ticking exercise. In the interview, he summarizes what “beyond compliance” looks like using three practical proxies: governance, investment decisions (CAPEX), and incentives.   When management and the board get involved, meaning if actual governance comes into play, and they systematically integrate sustainability into the strategic decisions and business model of the company, then you alleviate sustainability at the strategic level, well beyond compliance.  Next, a company needs to invest and establish sustainability criteria when making key capital investment decisions that represent long-term vision and ambitions.  Such decisions drive future growth and again move the sustainability topic beyond mere compliance. Finally, people react to incentives.  By linking sustainability performance to well-defined and sufficiently distinctive incentives for people (not just management and the Board) also helps to focus on creating impact.

“Let me maybe summarise it in three things… First of all, governance matters… The second point is investment decision, CAPEX… And then the last one is incentives for people… … you can use it as proxies.”

Professor Rasche notes differences between countries in the manner in which companies embed sustainability into the core value proposition towards customers/stakeholders. He mentions that in some countries - notably in parts of the Nordics— sustainability is more integrated into the strategy of companies and that it drives key decisions. Professor Rasche believes that the specific ownership structures in the Nordic countries, with many large companies being held by family foundations, reinforces long-term horizons that make integration of sustainability as a value driver easier.

What boards should be asking in 2026

For boards, Professor Rasche emphasizes oversight: directors should challenge whether management is addressing the right sustainability risks and opportunities, and whether ESG targets are realistic and properly resourced—rather than fashionable commitments that cannot be delivered.

“Are you actually ready to seriously consider this target? Is this a realistic target to set? And do we have resources to also work in that direction?”

On proposals like having “nature on the board,” he is skeptical that this will become a dominant trend. Instead, he argues for boardroom competence and culture—treating sustainability as business-critical rather than charity.

“What matters… is that you have the right competencies… [and] a certain culture in the boardroom… [that] understands this is… about… significant risks and opportunities for the business.”

If reporting is softened, what keeps the transition credible? Capital

Perhaps the most direct moment in the interview comes when Professor Rasche is asked what is needed if reporting obligations are softened. His answer: the transition hinges on capital expenditure. He points to taxonomy-related signals suggesting that too little CAPEX is aligned with taxonomy criteria—meaning not enough money is actually flowing into the transition to the so much desired low carbon economy.

“This is the single biggest thing. You need to raise capital. We need CapEx… not enough money is flowing into the green transition of companies.”

He also warns against “lofty goals” without investment, welcoming moves toward more realistic target-setting.

Aligning the policy toolkit: taxonomy and due diligence

While noting that CSDDD is “a different animal,” he argues closer alignment—especially between the taxonomy DNSH criteria and due diligence—would go a long way, and he had hoped Omnibus would address it more by aligning the threshold between the CSRD and the CSDDD, but this did not happen.

“Aligning… the ‘do no significant harm’ criteria of the taxonomy with the due diligence directive would have gone a long way… [but] it has not really happened.”

Looking ahead: stability next — and a new review horizon

Despite the recent significant proposed changes to the CSRD, CSDDD, and ESRS, and resulting uncertainty and unpredictability, Professor Rasche expects greater stability from here on, arguing that the main simplification cycle is now largely done and that stability is needed to build routines and best practices for companies, information users, and auditors.

“I actually expect from here on a greater degree… of stability… We need to end this kind of endless back and forth.”

He also points to a future milestone in the CSRD: a review clause that sets the next major scope debate around 2031, so to assess whether and how the scope of the amended CSRD provisions should be extended, in particular to large undertakings below the new EUR 450 million turnover / 1,000 employee thresholds and to certain third-country undertakings operating directly in the EU.

“Probably the next big lighthouse… will be 2031 when the scope of the CSRD will be reviewed again.”

What this means for the audit profession (a direct message to registered auditors)

In the political debate around Omnibus, Professor Rasche notes two claims that raised attention: sustainability assurance is seen as a major cost driver and does not add enough value. However, Professor Rasche does not agree with these points (he calls these “myths”).  He argues the profession has great value in terms ensuring credibility of reported sustainability information (safeguard against the greenwashing risk) and that the profession should respond with better evidence than that used in the political debate, being more precise cost data by company type, withstronger emphasis on creating of value (trust and data quality), particularly as sustainability data becomes increasingly connected to financial markets.

“We need more studies… What really are the average costs of an audit for different types of companies… And then, of course, what is the value of it … being increased trust, increased data quality.”

He adds that incentives inside companies still often fail to drive real performance: ESG-linked bonuses may be too small and too easy to achieve, requiring “smarter incentive systems.”

“As indicated previously, we need… smart incentive systems, and it really needs to matter for the executives… when they receive their bonuses.”

Key takeaways (in brief)

  • The EU has taken a step back in ambition over the last 12–16 months, driven by “simplification” and driving an agenda on short-term pressures.
  • Omnibus is more than technical simplification; it reshapes core directives and creates market confusion (maybe some would say de-regulation) by moving too fast.
  • Narrowing the CSRD scope risks blind spots—especially in high-impact sectors and SME-based economies.
  • Voluntary reporting will grow, but the fragmentation risk increases; assurance becomes a key trust mechanism.
  • “Beyond compliance” becomes visible through governance, CAPEX, and incentives.
  • The transition’s credibility depends on capital expenditure that genuinely shifts toward sustainable investments.