The European Commission will radically simplify EU green regulations in a bid to jumpstart Europe’s struggling industry and compete with faster-growing economies in Asia and America.
The changes will affect three laws that force companies to take more responsibility for their environmental impacts, European Commission President Ursula von der Leyen said. Business had complained these rules were complicated and onerous, and suffocated Europe’s competitiveness.
It’s a decisive pivot away from the Green Deal program of the last five years, which put climate and the environment at the center of European lawmaking. The hope was that where Europe went, the world would follow.
But the latest retreat suggests Brussels no longer trusts this narrative, and is worried its green regulations in their current form will have a negative economic impact — a fear shared by a growing number of European countries, businesses, and economic experts.
It also reflects Europe’s new political reality, where a shift to the right in national governments and European Parliament has brought rising skepticism about Europe’s environmental regulations.
Less is more
Von der Leyen said earlier this month she would trigger a legislative procedure to simplify three of the block’s flagship environmental laws from the last mandate: the Corporate Sustainability Reporting Directive, the Corporate Sustainability Due Diligence Directive, and the EU Taxonomy.
The reporting rules were introduced in the last mandate as part of the European Green Deal, — the bloc’s package of environmental regulation. They require businesses to provide extensive information about their environmental footprint, exposure to climate risk and contribution to the green transition. To comply, businesses must disclose environmental information about their own operations, and their supply chains.
They are among the most far-reaching green reporting rules anywhere in the world.
The announcement, which received little attention at the time, was made just days after the re-election of Donald Trump as the next U.S. president — a climate change skeptic who has promised to withdraw from the Paris climate agreement for a second time, slash regulation, and impose trade tariffs on all imports into the country.
Speaking to reporters at a press conference following the informal European Council in Budapest in early November, von der Leyen said her decision would reduce reporting burdens “in one step,” but without compromising the intentions of the directives.
“The questions we are asking, the data points we are collecting — thousands of them — is too much, often redundant, often overlapping. So it’s our task to reduce this bureaucratic burden without changing the correct content of the law that we all want,” she said.
The announcement came after member countries said during the Council meeting that the EU needs “a simplification revolution” to ease regulatory burdens on businesses coming from Brussels, and boost competitiveness.
Growing increasingly concerned that the region is crippling itself with the so-called “red tape,” country leaders also asked the Commission to make “concrete proposals on reducing reporting requirements by at least 25 percent in the first half of 2025.”
The Commission has heeded these calls already. In October, the Commission caved under pressure to propose a delay to the EU anti-deforestation rules, to give businesses more time before having to prove the products they sell and materials they use are not linked to deforested land.
Von der Leyen has also tasked all European commissioners-to-be, particularly Valdis Dombrovkis, who is taking on the economy and productivity portfolio, with cutting red tape.
In the line of fire
Criticism of EU corporate disclosure regulation is not new. In a leaked policy paper drafted by former German Finance Minister Christian Lindner, the minister said Berlin should seek to abolish the EU regulation on sustainability reporting rules, among others.
The suggestion echoed one made by French Prime Minister Michele Barnier in October, arguing that some aspects of the EU’s rules on corporate sustainability reporting be delayed by up to three years.
But there’s a long time between the moment EU countries express their discontent with EU law and when Brussels actually does something about it.
Not everyone is convinced by von der Leyen’s assurances that simplification won’t lead to a weakening of the regulations. “Of course I’m worried,” said Marie Toussaint, a French Greens MEP, the former rapporteur on the Corporate Sustainability Reporting Directive.
After all, the proposed delay to the deforestation law ultimately prompted center-right lawmakers in the European People’s Party (EPP) — von der Leyen’s political group — to attempt to water it down.
The common political line in the European Parliament and among EU countries, Toussaint argues, is to blame regulation — specifically environmental rules — for the lack of competitiveness in Europe. “It’s the opposite of what we were saying five years ago, which was [that] defending European competitiveness is ensuring we have the best products, produced in the best conditions,” she said.
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