The European Union has rewritten its sustainability disclosure rules. The consequences for the life sciences sector are substantial. CSRD reporting was once expected to capture tens of thousands of companies across the bloc. It now applies to a far smaller group of very large undertakings. For European biotech, the question has changed. It is no longer how to comply. It is how to respond when partners, investors and public funders keep asking for data that the law no longer demands.
CSRD reporting requires in-scope companies to publish audited sustainability information alongside their financial statements. Disclosures follow the European Sustainability Reporting Standards and a double materiality test. That architecture survives. The population of filers does not.
Two decisions completed the reset. In February 2026, an amending directive raised the thresholds that determine who must file. In July, the European Commission adopted a rewritten set of standards. Together they define the shape of the regime for the rest of the decade.
The two decisions that reset the rulebook
Directive (EU) 2026/470 was published in the Official Journal on 26 February 2026. It entered into force on 18 March 2026. The Council gave formal approval on 24 February. That followed a European Parliament vote on 16 December 2025, which closed a year of negotiation on the Omnibus I simplification package.
The directive narrows CSRD reporting to European Union undertakings with more than 1,000 employees and net turnover above 450 million euros. Both tests must now be met. The previous regime applied a two of three criteria test. Its thresholds were 250 employees, 50 million euros in net turnover and 25 million euros in balance sheet total. At proposal stage the European Commission estimated that the change would remove around 80 per cent of previously captured companies from the regime. Some subsequent analyses put the figure closer to 90 per cent. The reset was contested throughout. Industry bodies argued that the original regime placed a disproportionate cost on European competitiveness. Investor coalitions and civil society organisations argued that removing most filers would leave a data gap that markets still need in order to price risk.
Reporting for in-scope European Union companies begins with financial years starting in 2027. The first statements appear in 2028. Third country parent groups face a separate test. It applies where a group generates more than 450 million euros in net turnover within the Union. That group must also have a subsidiary or branch there with more than 200 million euros in net turnover. Those groups report from financial years beginning in 2028. Member States must transpose the changes by 19 March 2027.
A transitional provision matters for companies already reporting. Member States may exempt first wave filers that fall below the new thresholds from reporting for the 2025 and 2026 financial years. The exemption is optional, so national implementation must be watched closely.
The directive also removed the mandate for sector-specific standards. It dropped the planned move to reasonable assurance. Limited assurance remains in place. The Commission must adopt harmonised limited assurance standards by 1 July 2027.
What the revised standards change about CSRD reporting
On 3 July 2026 the Commission adopted a delegated act revising the European Sustainability Reporting Standards. A second delegated act established a voluntary standard for smaller companies. According to the Commission, the revision cuts mandatory datapoints by more than 60 per cent. Total datapoints fall by more than 70 per cent. Reporting costs are expected to drop by more than 30 per cent per company.
Those figures deserve context. A lower datapoint count does not reduce the work involved in the double materiality assessment. That assessment still determines what a company must report.
Both acts have passed to the European Parliament and the Council. A two month scrutiny period applies, and it can be extended by a further two months. Neither institution can amend the texts. If no objection is raised, the standards will be published in the Official Journal. They will then apply to financial years beginning on or after 1 January 2027. Early application is permitted for the 2026 financial year.
The standards follow technical advice submitted by EFRAG in December 2025. The Commission made targeted adjustments after a consultation that closed on 3 June 2026. Double materiality survives. However, the assessment now emphasises a top down approach that starts from business model and strategy. A separate standard covers third country groups. The EFRAG Sustainability Reporting Board approved the exposure draft on 1 July 2026, and EFRAG published it on 23 July with consultation open until 31 October 2026. Adoption is expected in 2027.
Why most European biotech falls outside the scope
The threshold combination excludes almost the entire European biotech sector. Healthcare biotechnology in Europe is dominated by small and medium-sized enterprises. Many are clinical stage and pre-revenue, with headcounts in the tens rather than the hundreds. Even successful commercial stage companies rarely approach the employee threshold.
The practical effect is clear. Reporting in the life sciences will be carried out by large pharmaceutical groups, established specialty pharma companies and the biggest contract manufacturers. Biotech enters the regime as a supplier, a partner or an acquisition target. It does not enter as a filer.
That position now carries a legal protection. The directive introduces a value chain cap. Under the cap, companies subject to CSRD reporting cannot require undertakings with 1,000 employees or fewer to supply information beyond the voluntary standard. The cap applies to requests made for reporting purposes under the directive. It does not extend to other regulatory frameworks or to ordinary commercial exchanges. The protection is also narrower than it first appears. It covers only the disclosures that the voluntary standard marks as necessary, and fewer of those again for companies with ten employees or fewer. A partner may still ask for more. It must then indicate which parts of the request exceed the cap and inform the supplier that it has a statutory right to decline.
What the first life sciences statements revealed
Evidence from the first CSRD reporting cycles indicates what large partners will expect. KPMG published a life sciences benchmark in November 2025. The study examined the 2024 disclosures of nine companies. These were grouped as pharmaceutical majors, biotech and specialty pharma, and contract manufacturers and healthcare services.
Companies disclosed an average of 29 material impacts, risks and opportunities. That figure rose to 50 among the pharmaceutical majors and fell to 23 for biotech and specialty pharma. Consumers and end users produced the largest cluster of material items. Own workforce, climate change and business conduct followed. That ranking reflects the sector. Patient safety, product quality and access to medicines all sit within the consumers and end users standard. Biodiversity was not material for the biotech or contract manufacturing groups. All nine companies reported taxonomy eligible turnover, capital expenditure and operating expenditure. The pharmaceutical majors reported more than 90 per cent eligible turnover. Gaps were clear elsewhere. None of the nine set quantitative pollution targets. Only two applied an internal carbon price of 100 euros per tonne of carbon dioxide equivalent.
EFRAG published its own assessment on 1 July 2026. It drew on 905 assured statements for the 2025 financial year, up from 656 the year before. Climate change and own workforce were material for 99 per cent of companies. Business conduct was material for 95 per cent. The share disclosing a climate transition plan rose from 55 to 69 per cent. Companies identified an average of 6.4 material topics. However, they set measurable targets for only 3.3 of them. Statements shortened from an average of 115 pages to 95.
Where the pressure now comes from
Falling outside the CSRD reporting perimeter has not removed demand for the data. A survey published by osapiens, a sustainability reporting software company, polled 403 senior decision makers between December 2025 and January 2026. All worked at companies with at least 1,000 employees in the United Kingdom, the DACH region, Benelux and France. It found that 24 per cent would leave the perimeter under the new thresholds. Of those companies, 90 per cent intended to maintain or expand their reporting. Almost 90 per cent of all respondents expected to increase investment in reporting tools and automation within the year, a finding in which the publisher has an evident commercial interest. The same study records a countervailing result. 84 per cent expect reduced regulatory scrutiny to mean fewer internal resources for reporting over time.
Andreas Rasche, Professor of Business in Society and Associate Dean at Copenhagen Business School, contributed to the study. The results, he noted, indicate a clear preference for reporting continuity among the larger firms exempted under Omnibus I.
For biotech, that pressure arrives through three channels. Pharmaceutical partners still need value chain data for their own reporting, even though the cap limits what they may demand. Institutional investors and specialist life sciences funds apply their own screens. Capital allocation across the sector is meanwhile being reshaped by global funding shifts. Public funders and procurement bodies also attach sustainability criteria to awards more frequently.
The sector’s own trajectory suggests the data will keep flowing. EFPIA reported in June 2026 on progress among its member companies. Average Scope 1 emissions fell by around 18 per cent between 2019 and 2024, and Scope 2 emissions fell by 64 per cent. Renewable electricity consumption tripled in five years. Around 75 per cent of members hold climate targets covering all emission scopes. Writing for the federation, science policy director Kirsty Reid observed that the shift in EU climate policy “creates both opportunity and pressure” for the sector. Pharmaceutical companies are still expected to produce high quality environmental data across complex global value chains.
The United Kingdom position
British biotech companies face a parallel timetable. The Department for Business and Trade published UK Sustainability Reporting Standards S1 and S2 on 25 February 2026. These endorse the International Sustainability Standards Board framework with minor amendments. They are voluntary. They also address financial materiality rather than the double materiality model that underpins the European regime. A Financial Conduct Authority consultation on aligning listing rules closed on 20 March 2026. A policy statement is expected in autumn 2026, with rules proposed to take effect from 1 January 2027. British companies with substantial European turnover may still be drawn into CSRD reporting through the third country provisions.
What to do before 2027
A small number of European life sciences companies remain in scope for CSRD reporting. Their immediate work is to map the revised standards against existing materiality assessments and reporting processes. They must then decide whether to apply the new standards early, for the 2026 financial year.
The far larger group now sits outside the regime. For them, the proportionate response is a voluntary disclosure that answers most value chain requests in one place. The voluntary standard sets the ceiling on what an in-scope company may require, although it does not prevent a partner asking for more, so some bespoke requests will still arrive. It remains the most efficient basis for responding to customers, banks and investors. Biotech companies that treat CSRD reporting as a partner requirement, rather than a compliance burden, should spend less time on questionnaires.
The regulatory direction is settled, but the detail is not finished. Scrutiny of the revised standards runs into the autumn. National transposition continues into 2027. Assurance standards are due by the middle of that year, and the third country standard follows afterwards. The regime has narrowed sharply. What partners, lenders and public funders ask of European biotech has not.
