The EU Commission’s recent proposal to revamp sustainability reporting regulations has sparked significant debate.
While large multinationals will still be required to report, the proposed Omnibus measures raise the Corporate Sustainability Reporting Directive (CSRD) thresholds to companies with over 1,000 employees and €50m in turnover, effectively exempting many SMEs from mandatory disclosures.
This move was framed as an effort to streamline the compliance process for smaller businesses struggling with the complexities of sustainability reporting, given rising energy costs, geopolitical instability, and diverging global sustainability policies.
Balancing simplification with accountability
Carlotta Costa, director of ESG at Dimitra, an AgTech platform supporting smallholders, shared a nuanced perspective with us on the changes:
“It’s crucial to reduce administrative costs, especially for smaller businesses. From a business perspective, not every company has the resources to employ a dedicated sustainability officer or an ESG-focused legal team. So, to some extent, I agree with simplifying the process. However, I also hope that these changes won’t pose a significant challenge for the EU as a whole in adopting these new standards and ensuring accountability when it comes to climate disclosures.”
Ongoing investor demand for transparency
“While some may see this as a pushback, I don’t believe it will undermine the EU’s sustainability agenda. In fact, I view it as a natural evolution within the ESG space.
“We are navigating a highly complex ESG landscape, and if we can maintain accountability with a more focused set of ESG data points, we are still heading in the right direction.”
Evolution in the ESG space
Though, she also highlighted the concerns around ensuring that these simplifications don’t undermine the level of transparency that investors, consumers, and other stakeholders now demand.
“Personally, as an ESG investor, I follow financial trends closely. There is significant resistance to the simplification of reporting because investors and stakeholders are demanding greater transparency and accountability regarding their investments. I don’t foresee a complete reversal of progress, but rather a significant shift that will ultimately guide us back toward the sustainability roadmap.”
Blockchain and AI
Costa also noted the critical role that technology can play in helping businesses maintain high ESG standards despite these regulatory simplifications. Technology can be a crucial enabler for SMEs to meet sustainability requirements without the need for specialized sustainability officers or legal teams, she claimed.
By leveraging innovations in blockchain and AI, agribusinesses and feed companies can continue to uphold sustainability practices while navigating the shifting regulatory landscape. They are already playing a transformative role in sectors like agri-business, she noted.
In the agri-food industry, blockchain has proven invaluable in enhancing supply chain traceability, reducing inefficiencies, and ensuring transparency.
Systems such as IBM Food Trust, Walmart’s Blockchain for Food Safety, and Provenance are already enabling greater accountability and consumer trust by tracking products from farm to shelf, said Costa.
These tools not only help businesses meet sustainability reporting requirements but also provide the kind of transparency that investors now expect in a world where climate risks are increasingly seen as financial risks, she added.
Blockchain platforms also enable smallholder farmers to directly access markets through smart contracts. Farmers receive fair prices without intermediaries while ensuring product traceability and compliance with sustainability standards.
Examples of Agriculture Sector-Focused Blockchain and AI Tools
AI-powered platforms like Microsoft Azure Data Manager for Agriculture are streamlining the collection and analysis of environmental data – ranging from GHG emissions to water usage – which helps farmers and small businesses comply with EU regulations. This kind of technology democratizes access to high-tech sustainability tools, enabling even smaller players to stay on top of their environmental impact without the need for extensive expertise, added Costa.
Deloitte’s Geospatial Intelligence uses satellite imagery and AI to quantify deforestation-linked emissions, enabling compliance with non-financial regulations such as the EUDR.
IBM Food Trust & Blockchain combines AI and blockchain to track supply chains, ensuring compliance with CSRD/CSDDD while auto-generating audit-ready reports.
Genesis Analytics in Africa involves AI-driven advisory services delivered via SMS/WhatsApp to help smallholders optimize land use and reduce certification costs, boosting market access.
Bumble Bee Foods uses blockchain to track yellowfin tuna from catch to consumer. Consumers can scan QR codes on packaging to access detailed information about the tuna’s origin, fishing practices, and sustainability certifications. This fosters transparency and builds consumer confidence, she stated.
The UN Development Programme (UNDP) explored blockchain for improving traceability in complex agri-food systems. It addressed issues like human rights violations and environmental degradation by providing transparent records of production practices across global supply chains.
Ultimately, as Costa points out, the focus should remain on maintaining transparency and driving long-term sustainability – objectives that can be supported by the right technology, even amid regulatory changes.
Credit: feednavigator.com
