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The European Commission’s Omnibus Proposal aims to simplify sustainability regulations and boost business competitiveness. While these changes reduce administrative burdens, they also weaken transparency, corporate accountability, and environmental oversight.
With revised reporting thresholds, diluted due diligence, and relaxed carbon policies, the EU risks stepping back from its global leadership in sustainability. But what do these changes really mean for businesses, investors, and the planet? Let’s dive in.
So, what is it all about?
The proposal modifies critical aspects of sustainability legislation, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the Carbon Border Adjustment Mechanism (CBAM), and the EU Taxonomy. While some argue these changes will make regulations more business-friendly, others see them as a retreat from the EU’s leadership in sustainability.
So, what exactly has changed, and what does it mean for businesses, investors, and the planet?
Revised Reporting Thresholds – Who’s off the hook?
Under the CSRD, the employee threshold for mandatory sustainability reporting has been raised from 250 to 1,000 employees. This shift exempts approximately 80% of previously covered businesses, significantly reducing the number of companies required to disclose their sustainability impacts.
By narrowing the scope of sustainability reporting, the EU risks weakening corporate accountability and creating a loophole where smaller but still impactful businesses can avoid disclosure.
Weakened Due Diligence – A Loophole for Supply Chain Risks?
The Corporate Sustainability Due Diligence Directive (CSDDD), initially designed to hold businesses accountable for human rights and environmental risks across their supply chains, has been postponed to 2028. Additionally, the frequency of supplier assessments has been drastically reduced—from annual evaluations across entire supply chains to only once every five years for direct suppliers.
This delay and dilution raise concerns that businesses may deprioritize sustainability and human rights due diligence, reducing the pressure to adopt responsible sourcing practices.
A Simpler Carbon Border Levy – But at what cost?
The Carbon Border Adjustment Mechanism (CBAM)—the EU’s tool to level the playing field by taxing high-carbon imports—now introduces a 50-ton annual import threshold. This means that approximately 182,000 importers will be exempt from compliance.
With this exemption, CBAM may lose its bite as a deterrent against high-carbon imports, reducing its effectiveness in incentivizing cleaner global supply chains.
EU Taxonomy Dilution – Less Data, More Greenwashing?
The EU Taxonomy, designed to define what qualifies as a sustainable economic activity, is now set to be simplified—reducing the number of required data points by about 70%.
By cutting back on the data required to assess sustainability performance, the EU may be inadvertently lowering the bar for green investments, undermining efforts to direct capital toward genuinely sustainable activities.
Final Thoughts: A Step Back for Sustainability Leadership?
While the Omnibus Proposal is designed to simplify compliance and enhance competitiveness, it risks undermining corporate accountability, sustainability transparency, and environmental progress.
These changes raise questions whether the EU is now prioritizing business-friendly policies at the expense of environmental and social commitments.At a time when climate action and supply chain transparency should be a ccelerating, not slowing down, these rollbacks could allow businesses to sidestep accountability and delay much-needed action
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