The European Commission on Wednesday announced plans to relax its regulations on corporate sustainability reporting and supply chain transparency, in a major revamp of its economic strategy aimed at enhancing Europe's competitiveness with the United States and China.
The plans – or "Simplification Omnibus" – are part of a wider package of reforms aimed at helping Europe's companies, and they also include incentives to encourage industry to decarbonise and measures to lower energy costs.
European businesses may cheer after long complaining that tight regulations and bureaucracy hampered their ability to compete globally, but opponents of the new deregulation drive said it "guts corporate accountability."
At the same time, environmental groups say that far-reaching deregulation and the boosting of conditions for energy-intensive companies will come at the cost to the EU's ambitious climate targets.
Speaking at a conference of industrial leaders in the Belgian port city of Antwerp, EU Commission President Ursula von der Leyen said, "We want to cut the ties that still hold you back. So that Europe can be not only a continent of industrial innovation, but also a continent of industrial production."
EU Commissioner Wopke Hoekstra called it "a game changer for Europe's economy," adding the package of plans was the reaction needed to reverse years of decline in the global marketplace.
"We're all too aware that our slow economic growth, our dependencies and the fragmented market we still operate in are increasingly a problem, particularly against a backdrop of volatile geopolitics," he said.
In the U.S., President Donald Trump has been rolling back regulation to spur growth.
However, even as it loosens its reporting rules around green policies, the EU executive said the European Union would stand firm on its net zero emission targets and other climate goals.
"EU companies will benefit from streamlined rules," von der Leyen said in a statement.
"This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way."
EU Commission Vice President Valdis Dombrovskis said that with the United States becoming a more uncertain ally by the week, the plan should be seen as a "call to action" to set EU industries free from excessive constraints and provide them with aid where necessary.
"Put simply, we cannot hope or expect to successfully compete in a perilous world with one hand tied behind our backs," Dombrovskis said.
The European Commission, the bloc’s executive arm, aims to reduce reporting burdens by 25% in an initial wave of measures in the first half of 2025 – which it said would translate into savings of 40 billion euros ($42 billion) for European companies.
Businesses and industry lobby groups frequently complain that bureaucratic processes in the EU hold back the bloc compared with the U.S. and China, which have faster-growing economies.
"It's a machine we have created in Brussels – I don't know if we need a DOGE program – plenty of civil servants, which are in fact there to create regulations. That's a problem," TotalEnergies boss Patrick Pouyanne said this month, referring to the U.S. Department of Government Efficiency, which is overseeing a sweeping government cost-cutting program.
"It's a question, can Europeans really re-think their own model?" he added.
The Commission also set out a "Clean Industrial Deal," a second pillar of the competitiveness plan, designed to support energy-intensive industries facing high costs and heavy bureaucracy as they fight for market share with global rivals.
It also aims to boost the clean tech sector.
The EU targets net zero greenhouse gas emissions by 2050.
The Clean Industrial Deal proposes making 100 billion euros ($105 billion) available to support EU-made clean manufacturing and streamlining public procurement processes for clean tech.
It was not immediately clear how much of the 100 billion euros was new, additional capital.
The Clean Industrial Deal would take time to pass legislative procedures but it "reflects an important signal of the EU's intent to accelerate and fiscally support decarbonisation of its industry," analysts at Jefferies said.
The "omnibus" proposes easing the rules on how businesses report the environmental and social impact (CSRD) of their activities as well as supply chain due diligence rules (CSDDD).
The plans exempt any company with fewer than 1,000 employees from the CSRD rules: roughly 80% of the companies currently covered by the directive.
The due diligence law, meanwhile, will be delayed by a year until 2028 and will only require companies to make environmental and human rights checks on their direct suppliers rather than along their entire supply chain.
Critics said the Commission's plans threw Europe into reverse and threatened to erase years of hard-fought gains in sustainability and green transition leadership.
"This will risk creating a disastrous lack of ESG data across the region: a nightmare for responsible investors and consumers. This new package guts corporate accountability," said Giorgia Ranzato, sustainable finance manager at environmental campaign group T&E.
Belgian Prime Minister Bart De Wever, who spoke ahead of von der Leye, insisted choices had to be made.
"There is no point in subjecting our industries to regulations that push them out of the markets, forcing them to relocate to regions with less strict climate policies. Neither our economy nor the climate benefits from such an outcome," he said.
The Commission also announced plans it said would exempt about 90% of importers from its planned carbon border tariff on the grounds that their imports accounted for only 1% of emissions covered by the policy.
The walk-back on ESG rules has met sharp resistance from environmental campaigners, some investors and EU lawmakers.
The proposed changes must win support from the European Parliament and a reinforced majority of the 27 EU member states, meaning there may still be changes.
