Today (22 April) marks Earth Day. However, in a move that could redefine the European Union's approach to climate policy, the European Commission has unveiled several legislative proposals aimed at "simplifying" some key laws of the Green Deal.
Under the plan, announced this February as part of a wider deregulation package, around 80% of companies currently covered by EU sustainability disclosure rules would be exempt. The Commission argues the changes will ease bureaucratic burdens, but environmental campaigners and some MEPS have condemned the proposals as a retreat from climate commitments.
The draft legislation marks the first instalment of the Commission's so-called 'omnibus simplification package' – a planned series of red tape-cutting measures to boost business competitiveness and catch up with the US. It includes amendments to four major components of the Green Deal: the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU taxonomy for sustainable investments, and the Carbon Border Adjustment Mechanism (CBAM).
Under the revised CSRD, the threshold for mandatory environmental and social reporting would be raised significantly. Only companies with over 1,000 employees and either €50 million in annual turnover or €25 million in total assets would be required to report, slashing the number of covered firms from 50,000 to approximately 10,000, according to Politico.
Although a previously leaked draft to Politico had floated a high turnover threshold of €450 million, the final proposal retains the principles of 'double materiality'. This means companies must still report both their impact on the environment and the risks posed to them by climate change. Earlier drafts had reportedly sought to remove this cornerstone of the reporting directive.
The Commission also proposes halving the data points companies must collect and scrapping sector-specific reporting standards due in 2026.
Meanwhile, the scope of the CSDDD – a key piece of legislation requiring companies to assess human rights and environmental harms in their supply chains – would be significantly curtailed. Firms would only be expected to evaluate their direct suppliers, and the frequency of checks would be reduced annually to once every five years.
The directive's implementation would also be postponed pending further negotiations.
The EU taxonomy
The measure that defines which economic activities can be classed as 'green' would become optional for up to 85% of firms. The Commission also proposes exempting 90% of importers from the CBAM, arguing that these firms are responsible for just 1% of total emissions covered by the carbon tax.
Despite criticism, the Commission insists the changes are about simplification, not deregulation. According to its estimates, the proposals would cut administrative costs by €6.3 billion and unlock €50 billion in public and private investment.
The proposals will now be scrutinised by the European Parliament and European Council, where they are likely to face stiff opposition. In a time where the credibility of the Green Deal is under pressure, the outcome will prove a key test of the EU's ability to reconcile environmental ambition with economic realism.
