The European commission is set to reopen negotiations on the European Green Deal later this month with plans for an ‘Omnibus Simplification Package’ due to be revealed on 26th February. The proposal, which was first announced by Ursula Von Der Leyen, President of The European Commission in November last year, will see simplification of three of the bloc’s laws: the CSRD, the CSDDD, and the green finance taxonomy.
The CSRD (Corporate Sustainability Reporting Directive), which came into force in 2023, requires EU businesses to disclose their environmental and social impacts; the CSDDD (Corporate Sustainability Due Diligence Directive) will impose sustainability and human rights due diligence standards on firms operating within the EU; and the EU green taxonomy- a cornerstone of the EU’s sustainable finance framework- defines criteria for economic activities that are aligned with a net zero trajectory by 2050, as well as broader environmental goals[i].
Several NGO’s and investor groups have raised concerns that the EU may now be watering down or delaying key environmental regulation. Notably, France has been vocal on the matter, calling for an indefinite delay to CSDDD and a two-year delay to CSRD, according to a document seen by Politico[ii]. In his annual address last month, French economy minister Eric Lombard said that: “We need to focus on legislation that complicates the daily lives of your companies and slows down their growth,” adding a call for simplification of the CSRD and postponement of CSDDD until the day “it will be simplified.”[iii] Further, in a letter to Von Der Leyen sent last December, Germany also called for a two-year delay to the implementation of the reporting rules, as well as “a significant reduction in the content of CSRD”[iv].
Ahead of negotiations on the Omnibus Simplification Package later this month, Economy commissioner Valdis Dombrovskis convened a ‘simplification roundtable’ last Thursday (6th February). The EU executive has been criticised for not only holding these talks behind closed doors, but also drawing up a participant list heavily skewed towards business interests.
This drew a response from a coalition of 150 civil society organisations which includes ClientEarth, E3G, ShareAction, the Sustainable Banking Coalition, and the World Benchmarking Alliance. In a statement released ahead of the simplification roundtable, the signatories expressed their concerns that reopening the legislative texts could cause confusion and uncertainty, and undermine progress on sustainability:
“We are deeply concerned by the current direction of policy making within the European Commission, particularly regarding the introduction of measures that can potentially weaken or undermine previously agreed legislation crucial to the EU’s sustainability goals”[v]
“In particular, we wish to state unequivocally that we firmly oppose any re-opening of previously agreed legislation, such as the Corporate Sustainability Due Diligence Directive, at level one. We believe that such a move would risk creating regulatory uncertainty, jeopardising investments already made and necessary future investments, undermining rights of citizens who have been affected by companies’ operations, delaying progress, penalising companies that have already invested significantly in compliance, and eroding the trailblazing EU leadership on corporate sustainability standards.”[vi]
In addition, investors managing a combined €6.6 trillion ($6.81 trillion) in assets have urged the EU to maintain sustainability disclosure rules. A joint statement published by three leading European investor membership bodies - Eurosif, IIGCC and the PRI - and supported by more than 200 investors and other financial sector actors, warns that “reopening these regulations in their entirety risks creating regulatory uncertainty and could ultimately jeopardise the Commission’s goal to reorient capital in support of the European Green Deal.”[vii]
Nathan Fabian, Chief Sustainable Systems Officer at Principles for Responsible Investment (PRI), said, “Europe will need finance and corporate sectors to work together to meet economic competitiveness, climate, and nature goals. Wholesale changes to key sustainable finance tools and frameworks during their implementation creates uncertainty in the market and risks undermining the ability of economic actors to communicate clearly, setting back economic transition. Undoing the progress made is not in the interests of investors either. Investors would benefit from increased consistency of the framework, but sustainability information is essential to investors’ confidence and allocation decisions. The objectives and integrity of the sustainable finance framework must be maintained.”[viii]
[i] EU taxonomy for sustainable activities - European Commission
[ii] France urges Brussels to indefinitely delay EU green rules for business – POLITICO
[iii] Ibid
[iv] Ibid
[v] 05.02.25_CSO_input_EC_Roundtable_Consultation_on_Simplification.pdf
[vi] Ibid
[viii] Ibid
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
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