Businesses & politicians voice concerns for sustainability over the European Commission’s upcoming omnibus package & its regulation simplification aims

Regulatory practices can be a double-edged sword.

The European Union is in the throes of balancing this delicate act, trying to fine-tune its approach with the new omnibus regulation package.

This legislative bundle is designed to reduce the regulatory load that businesses currently face, though not without controversy and challenges.

More than 400 French firms represented by the Collège des Directeurs du Développement Durable (C3D) have asked the European Commission to “support companies with resources and guidance to ensure compliance while maintaining competitiveness”.

Unilever, Nestlé, Mars, Primark, DP World and Signify, among others, signed an open letter that says: “The most practical step the European Commission can take to support future competitiveness is to focus on developing the clear and practical guidance needed to support businesses in implementing the CSDDD.”

The intricacies of the EU’s omnibus regulation are not only a concern for the business community.

Even within the political spheres, such as members of the European Parliament from the group Renew Europe, there exists a resistance towards substantial alterations proposed by this package.

Andreas Rasche, Professor and Associate Dean at Copenhagen Business School, explains: “The EU Commission must look for a balanced and inclusive approach towards the omnibus.

“Nobody is arguing against simplifications, if changes are proportionate.

“But changes to the scope and timeline of regulations like CSRD and CSDDD are not simplifications, they stand for a deregulation agenda that reflects political opportunism.”

Why is the omnibus on the table?

Driven by insights from the 2024 Draghi Report, which spotlighted the hurdles that innovative European companies face, the EU aims to refine competitiveness through regulatory simplification.

The report criticised the European regulatory landscape as a barrier to scaling up within the continent.

It highlighted that businesses often turn to US markets and venture capital to expand.

The EU’s Competitiveness Compass was conceptualised to streamline regulations, easing the operational terrain for businesses within the union.

In December 2024, more than 90 organisations representing civil society, businesses, banks and investors issued a joint statement urging the EU to improve its implementation of CSRD standards whilst maintaining the directive’s robustness.

The European Commission plans to publish its omnibus package on 26 February 2025 with measures to streamline sustainability reporting requirements across multiple laws including the CSRD and CSDDD.

Even before this, US politicians had expressed concerns regarding the global implications of such stringent EU-centric regulations impacting international firms.

Ursula von der Leyen, President of the European Commission, has said that “the content of the laws is good, we want to maintain it and we will maintain it”.

She adds: “But the way we get there, the questions we’re asking, the data points we’re collecting is too much, often redundant and often overlapping.”

Varying perspectives on future directives

Despite the proposed simplifications, the response from the business sector has been mixed.

​​​​​​​”We at DP World want the commission not to go back on committed legislation covering supply chain due diligence (CSDDD) and reporting (CSRD),” says Nicholas Mazzei, Vice President for Sustainability at DP World.

“What we in the business world want is clear implementation guidance from the commission and not the reopening of adopted legal texts for renegotiation.”

The open letter from C3D reads: “ln the context of the ongoing informal consultations on the drafting of the omnibus regulations for the CSRD, CSDDD and the Environmental Taxonomy, we, the French Sustainability Officers responsible for implementing these regulations, urge you to uphold the original intent of the co-legislators and the broader Green Deal agenda.”

A position paper from Renew Europe says: “Renew firmly believes that embracing the Green Deal in a market driven approach is the only way to enhance our competitiveness and unlock genuine business opportunities. It will also strengthen our resilience against external shocks.

“The Clean Industrial Deal will be the EU’s roadmap to compete and win in the global race towards relocating key green value chains.

“It should offer a comprehensive enabling and financing framework for implementing the EU’s climate targets in a way that makes EU industries and sectors leaders in competitiveness, innovation and sustainability.”

Lara Wolters, Member of the European Parliament (S&D, NL), says the current omnibus approach is “not good enough for Europe”. 

She describes the proposition as a “panic button” reaction from politicians in France and Germany and said businesses need stability and certainty to make long-term strategic decisions.

Gwenaelle Avice Huet, Executive Vice President of Europe Operations and Member of the Executive Committee at Schneider Electric, says: “The way forward is clear: to keep driving momentum, we need to accelerate innovation and digitalisation.

“Now is the time to come together with united policy and simplified processes to clear the barriers to green growth.”

by Jasmin Jessen

Credits: energydigital.com