Campaigners' fury at attempt to 'eviscerate' EU sustainability laws
An initiative claiming to ‘simplify’ EU sustainability laws has been branded ‘full-scale deregulation’ by opponents, with former UN high commissioner for human rights Mary Robinson calling on the European Parliament to resist the reforms.
‘A betrayal’, ‘pure hypocrisy and ‘full-scale deregulation’ are descriptions of a European Commission initiative to ‘simplify’ corporate sustainability reporting laws announced this week.
On Wednesday 26 February EU Commissioner for economy and productivity, and for implementation and simplification, Valdis Dombrovskis, announced the much-anticipated ‘omnibus’ package on sustainability, an initiative the Commission said would streamline complex corporate sustainability reporting laws.
The Commission pledged the simplification of the Corporate Sustainability Due Diligence Directive (CSDDD), the Corporate Sustainability Reporting Directive (CSRD), and the Taxonomy Regulation would help “rekindle economic productivity and secure the EU’s competitive edge” as part of a push to ensure the bloc’s economic competitiveness.
But the package was met with fury by advocates of the corporate sustainability reporting laws, who alleged the Commission was dismantling corporate accountability at the behest of big-business lobbyists.
Criticisms of the package include that it reduces corporate responsibility for monitoring human rights and environmental abuses, removes obligations for companies to terminate harmful business relationships, waters down financial penalties, removes civil liability provisions, delays reporting requirements and dramatically reduces the number of companies covered.
Depriving investors of critical data
Maria van der Heide (pictured), head of EU policy at ShareAction, a charity promoting responsible investment, said the Commission was handing big businesses a free pass to avoid responsibility for their impact on people and the planet. She said the package watered down CSDDD to “little more than a box-ticking exercise” and the changes to CSRD would deprive investors of critical data needed to drive the green transition.
Warning that through the package the EU taxonomy framework was at risk of being significantly weakened, van der Heide said: “By reducing both the number of companies and data points in scope and lowering technical standards, the Commission is opening the door to rampant greenwashing, making it harder for investors to distinguish truly sustainable businesses from those that are not.”
The Commission is opening the door to rampant greenwashing, making it harder for investors to distinguish truly sustainable businesses from those that are not
Investor membership bodies the Institutional Investors Group on Climate Change, the European Sustainable Investment Forum, and the Principles for Responsible Investment issued a joint statement before the omnibus package was announced. The statement, which represented more than 200 financial sector actors, including 162 asset owners and asset managers with a combined €6.6tn assets under management, warned the initiative was likely to create legal uncertainty, jeopardise Europe’s long-term economic competitiveness and harm investment rules.
One of the statement signatories, Philippe 
Zaouati (pictured), CEO of impact asset manager Mirova, said: “We are at a decisive turning point for sustainable finance. While climate concerns are often sidelined in the face of geopolitical and economic crises, it is imperative that we remain committed to our sustainability goals. Sustainable finance must reinvent itself and adapt to this new landscape, while preserving the fundamental principles that guide our actions.”
Full-scale deregulation
The European Coalition for Corporate Justice said the Omnibus proposal was full-scale deregulation designed to dismantle corporate accountability, which would return the EU to an era of voluntary accountability measures.
In a statement issued by the coalition, a civil society network advocating corporate accountability, Kalpona Akter (pictured), a labour activist from Bangladesh, said: “With this decision [to limit due diligence to direct suppliers], we as workers understand that Europe does not care who they are sourcing products from, if it’s from Bangladesh or India, it does not matter because it is not the responsibility of big EU corporations.”
Nele Meyer, director of the coalition, said stripping due diligence beyond direct suppliers, scrapping stakeholder engagement, and eliminating civil liability gave corporations a free pass to operate without consequences. She added: “The Commission is sending a clear message: time to turn a blind eye to forced labour, land grabs, and environmental devastation — leaving victims powerless while reckless corporations walk free.”
Nick Omonuk (pictured), a climate justice activist and defender from Uganda, described the Omnibus package’s cut on climate obligations as “pure hypocrisy”. He said: “It’s a death sentence for our communities. Companies are the biggest contributors to the climate crisis, but instead of holding them accountable, the Commission is letting them off the hook. Meanwhile, it’s us [rural communities in Uganda] who bear the impact of the destruction."
Phil Bloomer (pictured), chief executive of human rights charity the Business & Human Rights Resource Centre, branded the package “reckless deregulation”. In a statement, he said: “The EU’s sustainable finance framework has been a beacon of long-term competitiveness and responsible governance. Yet, at a time when climate and inequality crises demand bold leadership, instead of strengthening these vital protections, the Commission is bowing to irresponsible business lobbies and rolling back progress under the guise of simplification.”
Warnings from the impact community, businesses, banks and unions
In January, a coalition of impact organisations, including B Lab Global, GSG Impact and Social Value International, welcomed a simpler framework but warned of the risks involved.
In an open letter, the coalition partners said: “While we acknowledge the merit in streamlining certain data points to avoid redundancies, we strongly urge these changes to be made without compromising the integrity of the standards.”
Last week, workers’ organisations and trade unions from garment-producing countries across Asia, Europe and Latin America also opposed the package. A statement issued by the Women in Informal Employment: Globalising and Organising network said the new legislation would “exclude most supply chain workers”, including 49m home workers, by limiting CSDDD’s scope to focus only on direct suppliers.
Another open letter, published by a group of major businesses including Nestlé, Unilever, Mars and Primark, warned the Commission the omnibus package could undermine business certainty and investment.
The letter said: “Investment and competitiveness are founded on policy certainty and legal predictability. The announcement that the European Commission will bring forward an “omnibus” initiative that could include revisiting existing legislation risks undermining both of these.”
Speaking to the Straits Times, the European Banking Federation, whose members include BNP Paribas, UniCredit and Deutsche Bank, said the sheer scale of the proposed rollback of rules would make it harder for lenders to analyse credit risk.
Call on EU Parliament to oppose the simplification package
The Commission’s simplification proposal follows a report published last year that found excessive regulation was stifling competitiveness and innovation in the union. The Draghi report on European competitiveness called the EU sustainability reporting requirements a “major source of regulatory burden”, and criticised their compliance costs, in particular for smaller businesses, due to excessive complexity, lack of clear guidance and overlapping or inconsistent requirements between various pieces of legislation.
In the first major economic initiative of its 2024-29 mandate published at the end of last month, the Commission announced the Omnibus simplification package will “cover a far-reaching simplification in the fields of sustainable finance reporting, sustainability due diligence and taxonomy”.
The EU Commission stated that the omnibus package would “notably address the trickle-down effect to prevent smaller companies along the supply chains from being subjected in practice to excessive reporting requests that were never intended by the legislators.”
Von der Leyen’s new Commission’s attempt to eviscerate these sustainability laws must not be agreed by the European Parliament and by the member states
The omnibus package now needs approval from both the EU Parliament and Council before becoming an EU Directive. If approved, the Directive would then need to be incorporated into national law by each EU country.
Mary Robinson (pictured), former president of Ireland and UN high commissioner for human rights from 1997 to 2002, called on EU lawmakers, member states and responsible businesses to resist the reforms during the negotiation and adoption process.
In a statement issued by the Business and Human Rights Resource Centre, Robinson said: “[Ursula] von der Leyen’s new Commission’s attempt to eviscerate these sustainability laws must not be agreed by the European Parliament and by the member states.”
Top image: A protest in Brussels, Belgium, against the European Commission’s omnibus package, organised by Friends of the Earth Europe, the European Trade Union Confederation and the European Coalition for Corporate Justice. Credit: Philip Reynaers.
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