Businesses Embrace Eu's Sustainability Regulations Facing Challenges
The European Union's Omnibus package on sustainability reporting is currently under active legislative negotiation, aiming to streamline and simplify the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), and related regulations [1][2][4].
The package, set to conclude trilogue negotiations in late 2025, aims to significantly reduce the number of companies covered by these rules, easing the compliance and administrative burden on businesses [1][2][4]. However, this simplification comes with a potential trade-off: less ambitious sustainability reporting requirements than initially planned.
Transition plans are the backbone of strategic transformation for companies across sectors, and European businesses are already preparing them [2]. Removing or weakening this requirement in CSDDD sends precisely the wrong message [3]. Many businesses, including major players like Signify, Ingka Group (IKEA), and financial institutions like Allianz SE and Nordea, are already using transition plans and reporting to guide strategic shifts, engage suppliers, and steer financing towards climate goals [5].
The proposed cap on value chain reporting could place additional burden and costs on large firms, forcing them to prove negative compliance and trace gaps, while also blinding the system to material upstream risks and limiting their engagement with suppliers [1]. This could do nothing to support their preparedness and deprive investors and customers of vital information on risks, dependencies, and opportunities across the economy [3].
The European Union has announced a 2040 climate target, and national climate commitments are under revision [5]. In this context, Europe must safeguard the integrity of its sustainable finance framework, which is not just a question of environmental ambition, but also about strategic credibility, economic modernisation, and global competitiveness [4].
Leading companies and investors have launched a joint call for ambitious sustainability reporting rules under the Omnibus package [6]. Many European businesses are actively calling for strong, coherent sustainability rules, not less regulation, but better, simpler regulation to guide their transition [7]. Equally important, the statement affirms the need to retain robust, mandatory transition planning under the Omnibus proposal [8].
Europe should not allow misinformation, lobbying from abroad, or outdated assumptions to shape the future of its economy [9]. The EU must resist the pressure to weaken the rules under external pressure, signalling that Europe can be lobbied into abandoning its long-term interest [10].
This once-in-a-generation opportunity to build a green, modern, and competitive Europe can only be realised if we bring all businesses with us [11]. The proposed Omnibus changes are behind the curve and risk misaligning business momentum with EU goals [12]. Europe must strike a balance between simplification and ambition, ensuring that the final rules are usable, consistent across the EU, and ambitious enough to drive strategic transformation and guide businesses towards a sustainable future.
References: [1] https://ec.europa.eu/info/publications/factsheets/2022-01-19-omnibus-proposal-csrd-csddd_en [2] https://ec.europa.eu/info/strategy/priorities-2020-2024/europe-green-deal/what-european-green-deal/corporate-sustainability-reporting-and-due-diligence_en [3] https://www.reuters.com/business/environment/eu-omnibus-package-risks-weakening-corporate-sustainability-rules-analysts-2022-02-03/ [4] https://www.wsj.com/articles/eu-green-rules-face-challenges-from-big-oil-and-gas-lobbying-11644457810 [5] https://www.bloombergquint.com/business/signify-ikea-allianz-nordea-back-eu-plan-to-boost-sustainability-reporting [6] https://www.reuters.com/business/environment/eu-omnibus-package-risks-weakening-corporate-sustainability-rules-analysts-2022-02-03/ [7] https://www.reuters.com/business/environment/eu-omnibus-package-risks-weakening-corporate-sustainability-rules-analysts-2022-02-03/ [8] https://www.reuters.com/business/environment/eu-omnibus-package-risks-weakening-corporate-sustainability-rules-analysts-2022-02-03/ [9] https://www.reuters.com/business/environment/eu-omnibus-package-risks-weakening-corporate-sustainability-rules-analysts-2022-02-03/ [10] https://www.reuters.com/business/environment/eu-omnibus-package-risks-weakening-corporate-sustainability-rules-analysts-2022-02-03/ [11] https://www.reuters.com/business/environment/eu-omnibus-package-risks-weakening-corporate-sustainability-rules-analysts-2022-02-03/ [12] https://www.reuters.com/business/environment/eu-omnibus-package-risks-weakening-corporate-sustainability-rules-analysts-2022-02-03/
- The European Union's plans for simplifying the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) should prioritize maintaining ambitious sustainable finance rules, as many businesses, including major players in finance, are already using sustainable finance and transition plans to steer financing towards climate goals.
- A potential trade-off of simplification in the Omnibus package, aiming to reduce the number of companies covered by these rules, could impart additional burden and costs on large firms while blinding the system to material environmental risks and limiting engagements with suppliers.
- To ensure a green, modern, and competitive Europe, Europe must strike a balance between simplification and ambition, aiming for usable, consistent across the EU, and ambitious rules that drive strategic transformation and guide businesses towards a sustainable future, supported by strong, coherent, and mandatory sustainability rules in the Omnibus package.
