The eagerly anticipated proposal to simplify green reporting standards in the European Union (EU) is expected to bring significant relief to businesses that have been struggling with complex and overlapping sustainability requirements. Many companies have expressed concerns about the high costs and administrative burden of complying with these rules, which often require substantial investments in reporting systems and processes. The new proposal, set to be unveiled on February 26, aims to streamline three major green regulations: the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy. These changes are likely to ease the compliance burden on businesses, making it easier for them to meet sustainability standards without incurring excessive costs.
However, the proposed simplifications have sparked intense criticism from environmental and center-left groups, who argue that the changes water down essential regulations designed to address critical issues such as climate change, human rights abuses, and corporate exploitation. These groups fear that the reforms will undermine the EU’s commitment to sustainability and weaken its ability to hold businesses accountable for their environmental and social impacts. The debate over these changes is expected to escalate into a contentious battle in the European Parliament and among EU member states.
The leaked draft of the proposal reveals that the European Commission is planning to make several significant changes to the due diligence rules under the CSDDD. One of the most contentious changes is the limitation of corporate due diligence to only direct suppliers, rather than extending it to the entire supply chain. This narrowing of the scope could significantly reduce the ability of companies to identify and address human rights and environmental abuses in their global supply chains. Additionally, the proposal may also include changes to the EU taxonomy, which defines what counts as a sustainable investment, potentially loosening the criteria for what qualifies as a green investment.
Environmental and civil society organizations have strongly condemned the proposed changes, describing them as a reckless rollback of essential sustainability laws. Maria van der Heide, head of EU policy at the NGO ShareAction, criticized the move as a form of deregulation that threatens to undermine progress on key sustainability goals. She argued that the simplification of these rules is not about reducing bureaucratic burdens but about removing critical safeguards that protect people and the planet. These groups warn that the proposed changes will lead to a lack of accountability among businesses, allowing them to avoid taking responsibility for their environmental and social impacts.
The proposed changes to the CSRD and CSDDD are particularly concerning for advocates of corporate accountability. Under the current rules, companies are required to report on their environmental impact and climate risks, as well as to conduct due diligence on their supply chains to identify and mitigate human rights and environmental abuses. The leaked draft suggests that these requirements may be weakened, allowing companies to report less detailed information and limiting the scope of their due diligence obligations. This could result in a lack of transparency and accountability, making it harder for investors, consumers, and regulators to hold companies to account for their sustainability claims.
The debate over these proposed changes highlights the tension between business interests and sustainability goals in the EU. While companies argue that the current rules are overly burdensome and complex, environmental and human rights groups fear that simplifying these regulations will come at the expense of accountability and progress on sustainability. The outcome of this debate will have far-reaching implications for the EU’s ability to address pressing global challenges such as climate change, human rights abuses, and corporate exploitation. As the proposal moves forward, it is likely to face intense scrutiny and opposition from civil society groups, setting the stage for a heated political battle in the European Parliament and among EU member states.
