EU Political Update: EU Faces the Simplification Dilemma; Sustainability Under Pressure

Is the European Union dismantling the sustainability framework it has worked so hard to build? Between 2019 and 2024, the Green Deal ushered in a wave of ambitious regulations. Now, a drive for simplification is sweeping through Brussels, raising concerns about the future of these policies.

This shift is being pushed from the top. European Commission President Ursula von der Leyen has launched a fast-track deregulation initiative to reduce bureaucratic burdens on businesses. The move, which took many by surprise, signals a strategic pivot from environmental priorities to industrial competitiveness. While von der Leyen argues that the goal is merely to cut unnecessary red tape, critics warn that revisiting key regulatory frameworks could erode existing sustainability laws. The speed and centralized nature of this initiative have sparked alarm among EU officials, national diplomats, lawmakers, industry leaders, and NGOs.

Under pressure from France and Germany—concerned about European competitiveness in the face of U.S. deregulation—the European Commission is preparing a series of amendments through three “Omnibus packages” set to begin in 2025.

First Cut: The Sustainability Package

The first of these packages will focus on streamlining reporting obligations, due diligence, and the EU taxonomy. The priority? Reducing the burden on SMEs in supply chains—businesses that were never meant to bear such heavy compliance requirements.

Three key regulations are in the spotlight:

• Corporate Sustainability Reporting Directive (CSRD)
• Corporate Sustainability Due Diligence Directive (CSDDD)
• EU Taxonomy Regulation

The European Commission will present the first Omnibus package on February 26, 2025, through the standard legislative process, involving the Council, the Commission, and the European Parliament.

Tense Negotiations Behind Closed Doors

Behind this push for simplification, intense negotiations are taking place. On February 5 and 6, European Commissioner for Economy and Productivity, Valdis Dombrovskis, held closed-door meetings with major corporations and professional associations. The lack of transparency has sparked backlash from the European Parliament. Pascal Canfin (Renew, France) criticized the exclusion of key stakeholders, while several NGOs accused the Commission of violating its own “better regulation” principles by failing to conduct a public consultation before launching the initiative.

A New Ad Hoc Working Group in the Council

On February 12, the Polish presidency of the Council proposed creating an ad hoc working group focused on legislative simplification. This group, connected to the General Affairs Council (GAC), is expected to be formally established on February 26.

These thematic working groups, comprising experts from all 27 member states, prepare dossiers and negotiate policy details before formal ministerial meetings. However, this new working group will report directly to ambassadors rather than deputy ambassadors, bypassing the ministers and officials who originally negotiated these laws between 2022 and 2024. This move appears designed to avoid resistance from those reluctant to undo their own legislative work.

Opposition Gains Momentum

As regulatory revisions gain momentum, resistance is mounting. On February 4, European scientists published an open letter warning that deregulation could weaken climate policies and expose the EU to increased global competition from the U.S. and China.

Corporate concerns are also growing. On January 20, 11 major multinationals—including Nestlé and Unilever—raised alarms about potential changes to the CSRD and CSDDD frameworks. They argue that such revisions could create uncertainty, undermining regulatory predictability without properly reopening the legal texts.

NGOs have also taken a strong stance. On February 6, they protested outside the European Commission, accusing the reforms of prioritizing corporate interests over environmental and social protections.

A Parliamentary Showdown Looms

Lara Wolters, Member of the European Parliament (S&D, NL) and former rapporteur on the Corporate Sustainability Due Diligence Directive, delivered a keynote speech at the Frank Bold conference: Frankly Speaking on Sustainability and Competitiveness on January 30. While acknowledging that implementing sustainability laws will be challenging, she stressed that prematurely rolling back legislation is irrational. Such a move creates uncertainty, penalizes companies that have already invested in compliance, and rewards those that delayed action.

Wolters warned that political flip-flopping undermines business confidence and economic stability. Sustainability, she argued, is not just regulatory policy but a market reality shaped by consumer demand, investor expectations, and global competition. EU policymakers have spent years balancing legal certainty with business flexibility in the CSRD and CSDDD. Rushing to change the rules with minimal consultation, she warned, could do more harm than good.

The Road Ahead

With the first Omnibus package set for release on February 26, all eyes are now on the European Parliament. A fierce political battle is expected. The key question remains: is the EU streamlining for progress, or is it unraveling its own green ambitions?