Today, the European Commission announced a policy shift that marks a clear move away from the green commitments that were a cornerstone of Ursula von der Leyen’s previous mandate.
Despite previous assurances that simplification would not lead to deregulation and that the EU’s sustainability goals would remain intact, the proposed simplification omnibus introduces significant changes that constitute a major setback for transparency, accountability and sustainable finance.
“The Commission’s sudden urge to destroy laws that are crucial for the achievement of the EU Green Deal is a perilous approach that is forcing Europe into a time of regulatory uncertainty. Under the guise of “simplification”, the Commission put forward a proposal that will hinder economic and business success. Those who claim to advocate for long-term prosperity cannot, in good conscience, support an approach that strips the EU’s sustainable finance framework of its ambition, thereby taking Europe off its agreed course to become a competitive green economy. This sets a dangerous precedent with far-reaching consequences”, said Mariana Ferreira, Sustainable Finance Policy Officer at WWF European Policy Office.
The Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy, three laws targeted with this omnibus, are the backbone of Europe’s corporate sustainability framework, which is essential to unlocking the massive investments needed to bring the EU Green Deal to life. Without a strong foundation, Europe’s green transition is at risk and the effectiveness of these regulations is seriously jeopardised.
“The Commission’s flawed omnibus process was designed to culminate in a reckless proposal that threatens the commitments made and work done to achieve the EU Green Deal. The lack of transparency, the rushed development of the package, and the exclusion of civil society from the conversation prove that President von der Leyen’s priorities lie with the short-term gains of powerful corporate lobbyists, at the expense of Europe’s long-term well-being”, said Sebastien Godinot, Senior Economist at WWF European Policy Office.
The Commission’s proposal to exclude more than 80% of companies from the CSRD’s scope, rather than providing a proportionate reporting standard, will create significant data gaps, increase burdens on businesses, and restrict access to sustainable finance – ultimately hampering economic prosperity. Furthermore, removing sector-specific standards, which are designed to help companies identify the issues they should focus on per sector, is a missed opportunity to streamline materiality assessments. The proposed two-year delay in the law’s implementation would significantly undermine companies that have already invested in compliance while signalling that the environment and human rights are not a priority.
Similarly, limiting the value chain scope of the CSDDD overlooks critical risks across global supply chains, reducing the exercise to a waste of valuable resources, time, and personnel for companies. Eliminating the obligation to implement climate transition plans opens the door to greenwashing, turning the process into a mere box-ticking activity. This also undermines investor confidence and contradicts current market practice, slowing down the green transition.
Particularly concerning are also the proposed changes to the EU Taxonomy, which would effectively exclude more than 80% of businesses currently in its scope. This would erode progress made by companies in tracking and comparing their sustainability performance, weakening incentives to transition”, and reducing transition incentives. Additionally, by introducing a financial threshold, the Commission would significantly reduce both the amount and the quality of available information. Combined, these changes would make crucial data for our transitioning economy hard to compare and enable corporations to evade accountability for insufficient transition efforts.
Lacking a solid evidence base, this combination of proposals risks devolving almost a decade of structured EU policy making. It is now vital that the Member States and the EU Parliament take immediate and bold action to address the pitfalls of the suggested changes and ensure a more structured and evidence-driven approach moving forward.
