By Kate Abnett and Julia Payne
BRUSSELS (Reuters) -The European Commission plans to loosen its rules on corporate sustainability reporting and supply chain transparency, it said on Wednesday, in a bid to make Europe more competitive with the United States and China.
The plans – or “Simplification Omnibus” – are part of a wider package of reforms aimed at helping make Europe’s companies more competitive, and they include incentives to encourage industry to decarbonise and measures to lower energy costs.
European businesses may cheer after long complaining that tight regulations and bureacracy hampered their ability to compete globally, but opponents of the new deregulation drive said it “guts corporate accountability”.
In the U.S., President Donald Trump has been rolling back regulation to spur growth.
But even as it loosens its reporting rules around green policies, the EU executive said the European Union would stand firm on its net zero emission targets and other climate goals.
“EU companies will benefit from streamlined rules,” European Commission President Ursula von der Leyen said in a statement.
“This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way.”
The European Commission, the bloc’s executive arm, aims to reduce reporting burdens by 25% in an initial wave of measures in the first half of 2025 – which it said would translate into savings of 40 billion euros ($42 billion) for European companies.
The Commission also set out a “Clean Industrial Deal”, a second pillar of the competitiveness plan, designed to support energy-intensive industries facing high costs and heavy bureaucracy as they fight for market share with global rivals.
It also aims to boost the clean tech sector.
The EU targets net zero greenhouse gas emissions by 2050.
The Clean Industrial Deal proposes making 100 billion euros ($105 billion) available to support EU-made clean manufacturing, streamlining public procurement processes and simplifying state aid rules to give Europe’s ailing industries a boost.
Businesses and industry lobby groups frequently complain that bureaucratic processes in the EU hold back the bloc compared with the U.S. and China, which have faster-growing economies.
“It’s a machine we have created in Brussels – I don’t know if we need a DOGE programme – plenty of civil servants, which are in fact there to create regulations. That’s a problem,” TotalEnergies boss Patrick Pouyanne said this month, referring to the U.S. Department of Government Efficiency, which is overseeing a sweeping government cost-cutting programme.
“It’s a question, can Europeans really re-think their own model?” he added.
LIGHTER-TOUCH BUREAUCRACY
The ‘omnibus’ proposes easing the rules on how businesses report the environmental and social impact (CSRD) of their activities as well as supply chain due diligence rules (CSDDD).
The plans exempt any company with fewer than 1,000 employees from the CSRD rules: roughly 80% of the companies currently covered by the directive.
The due diligence law, meanwhile, will be delayed by a year until 2028 and will only require companies to make environmental and human rights checks on their direct suppliers rather than along their entire supply chain.
Critics said the Commissions plans threw Europe into reverse and threatened to erase years of hard-fought gains in sustainability and green transition leadership.
“This will risk creating a disastrous lack of ESG data across the region: a nightmare for responsible investors and consumers. This new package guts corporate accountability,” said Giorgia Ranzato, sustainable finance manager at environmental campaign group T&E.
The Commission also announced plans it said would exempt about 90% of importers from its planned carbon border tariff on the grounds that their imports accounted for only 1% of emissions covered by the policy.
The walk-back on ESG rules has met sharp resistance from environmental campaigners, some investors and EU lawmakers.
The proposed changes must win support from the European Parliament and a reinforced majority of the 27 EU member states, meaning there may still be changes.
“They do not simply lower the level of ambition, they eliminate it,” Socialist EU lawmakers said in a Feb. 20 letter to Von der Leyen.
(Reporting by Kate Abnett and Julia Payne; editing by Richard Lough, David Gregorio and Hugh Lawson)
