THE NECESSARY CHANGES AND TRENDS IN ESG REGULATIONS

Abstract

The founder of the World Economic Forum, K. Schwab, in one of his latest books, proposes the thesis that the rapid advancement of new technologies, following the development of industrial revolutions, is causing the merging of the biological, digital and physical worlds, which provides many opportunities for business and society, but at the same time leads to a number of dangers. Along with increasing the efficiency of business operations, increasing profits, opening up new markets, this also applies to accounting, control and auditing on business operations, as the transformational impact of IT redefines the functions of accounting and auditing, which will lead to the development of the professions of accountants and auditors, even to significant changes in accounting, control and auditing, in digital workplaces with the help and emergence of AI. But here the question already arises whether artificial intelligence will not replace the role of the accountant and cause the disappearance of the accounting profession. All these reflections are also triggered by the new requirements for reporting ESG regulations, according to Directive (CSRD) - (EU) 2022/2464 of 14.12. 2022. But in early 2025, there were indications that the EC was likely to reduce the scope of its requirements for reporting on companies’ environmental, social and governance (ESG) practices, after France first presented a formal proposal aimed at limiting the scope of the regulatory framework – the Corporate Sustainability Reporting Directive (CSRD).
Germany then called for limiting the scope of the directive, and this when it was clear that Europe’s largest economy had shrunk for a second consecutive year in 2024, with many business leaders and lawmakers blaming regulations for the loss of competitiveness. This led to February 26, 2025, when the so-called "Omnibus" program appeared, in which the EC proposes a drastic reduction in the obligations of enterprises to collect and report costs related to ESG regulations under Directive (CSRD) - (EU) 2022/2464, as well as to monitor and limit harmful carbon emissions. With the "Omnibus" a drastic reduction in administrative obligations and excessive workload regarding the preparation of non-financial reports for financial costs is expected, as well as a reduction in "over-regulation" for business, and in my opinion, other serious concessions from the original idea for mandatory ESG regulations are expected by the end of the year.