Officials are seeking to boost competitiveness and reduce the regulatory burden on businesses.
The European Commission has adopted new proposals that will cut red tape and simplify EU rules for citizens and business. In the recent Competitiveness Compass, the Commission set out its vision to make the EU’s economy more prosperous and competitive, building on the recommendations of the Draghi report. To regain competitiveness and unleash growth, the EU needs to foster a favorable business environment and ensure that companies can thrive.
The first two so-called Omnibus packages of simplification measures aim to achieve this. The measures will focus the sustainability reporting obligations on the largest companies which are more likely to have the biggest impacts on people and the environment, and make sure they do not burden smaller companies.
The proposal would limit the rules to companies with more than 1,000 employees and revenue over 50 million euros, which means that about 80 percent of companies currently covered by the directive would be exempt.
The commission is trying to simplify regulations that businesses say impede investment and growth. European officials have become increasingly concerned about waning economic competitiveness, particularly when compared with the United States and China.
This first package covers steps to:
- Make sustainability reporting more accessible and efficient
- Simplify due diligence to support responsible business practices
- Strengthen the carbon border adjustment mechanism for a fairer trade
- Unlock opportunities in European investment programs
On the reporting rules, known as the Corporate Sustainability Reporting Directive, the commission has also proposed a two-year delay for companies that would have been required to report this year and next. The commission said these changes, and related measures, would save companies about €6 billion per year in administrative work.
In its work program for 2025, the Commission announced a series of measures to address overlapping, unnecessary or disproportionate rules that create barriers for EU companies. Collectively, with these measures, the Commission wants to reduce administrative burdens by 25%, and by 35% for small and medium-sized businesses, by the end of its mandate in 2029.
The changes need to be approved by the European Parliament before taking effect.
