EC Proposes Major Cuts to Green Deal Requirements, Easing Business Burdens

The European Commission has introduced a package of proposals aimed at simplifying EU regulations, boosting competitiveness, and increasing investment potential. As part of these proposals, the EC has opted to ease certain environmental requirements for businesses, which it claims will save over €6 billion in administrative costs. This move is part of a broader effort to foster a more favorable business environment, allowing companies to innovate and create jobs.

Under the new rules, 80 percent of EU businesses will no longer be required to disclose their environmental impact. This includes exemptions from mandatory sustainability reporting, which will now only apply to larger companies with over 1,000 employees or annual revenues of €50 million. As a result, the number of companies required to report will drop from 50,000 to just 10,000.

The proposed changes also aim to simplify the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability and Due Diligence Directive (CSDDD), the EU Taxonomy for Sustainable Investments, and the Carbon Border Adjustment Mechanism (CBAM). The implementation of the CSRD will be postponed by two years, and companies will now only be required to collect half the data they previously needed to. Specific sector reporting standards will also be relaxed in 2026.

The Corporate Sustainability Directive will be significantly watered down, with companies now only needing to monitor human rights abuses and environmental damage in their direct supply chains. Additionally, these checks will occur every five years instead of annually. Meanwhile, the EU Taxonomy on Sustainable Investments will become voluntary for approximately 85% of businesses, meaning they will no longer need to report compliance with the EU's "green" list of economic activities.

The proposed revisions to the CBAM will exempt 90% of importers from the carbon border tax, which affects goods representing just 1% of the emissions associated with imports. However, the Commission does not plan to delay the implementation of the tax.

Despite the cost savings for businesses, which the Commission estimates could total €6.3 billion, some critics, including the Greens in the European Parliament, argue that the changes undermine the core objectives of the Green Deal. These adjustments, they say, reduce the scope of environmental regulations, which could undermine the EU’s climate goals. However, the EC insists that the revised package will still mobilize an additional €50 billion in both public and private investment.