BRUSSELS (Feb 26): The European Commission is due on Wednesday to unveil plans to loosen rules on corporate sustainability reporting and supply chain transparency that businesses in Europe say impede their ability to compete with China and the US.

The “Simplification Omnibus” is part of a wider package of reforms to bolster competitiveness of European companies, including incentives to encourage industry to decarbonise.

In the US, President Donald Trump has been rolling back regulation to spur growth.

The European Commission, the bloc’s executive arm, aims to reduce reporting burdens by 25% in an initial wave of measures in the first half of 2025, a target it says would mean savings of €40 billion (US$42.06 billion or RM185.59 billion) for European companies.

“(In) many parts of the world, we can do our job. And in Europe, we use more and more of our time in filling in useless pieces of paper,” BusinessEurope director general Markus Beyrer told Reuters of the view among CEOs in the industry association.

The Commission is also expected to set out its Clean Industrial Deal, a second pillar of its competitiveness plan, designed to support energy-intensive industries facing high costs and heavy bureaucracy as they challenge for market share with global rivals. It also aims to boost the clean tech sector.

A third pillar comes in the shape of an energy plan meant to lower energy costs for Europe’s businesses and consumers.

The Commission says its drive to cut red tape does not alter its net zero targets. The energy plan will double down on green energy — for example, promising faster permits for renewables. The Clean Industrial Deal will set out how to get more funding into clean industries.

Critics say that without robust reporting rules there will be fewer incentives for companies to move fast or for investors to move money into greener areas.

The omnibus will propose looser rules for businesses on reporting the environmental and social impact of their activities (CSRD) as well as supply chain due diligence rules (CSDDD).

A draft of the omnibus package seen by Reuters on Saturday would exclude an estimated 85% of the companies initially covered by the CSRD rules, by applying them only to companies with more than 1,000 employees and an annual turnover over €450 million.

The proposals were being finalised on Tuesday, and could change before they are published.

The draft change would reduce the number of companies covered by CSRD rules from more than 50,000 to fewer than 7,000, according to analysis by consultancy D A Carlin and Company.

The Commission also plans to exempt most companies from its planned carbon border tariff, another draft proposal seen by Reuters showed.

The draft would amend a due diligence law that now requires companies to ensure that businesses throughout their supply chain observe environmental and human rights standards. Under the revision, companies would only be obliged to make these checks for their direct suppliers.

EU countries including France and Germany have urged Brussels to delay the green rules. Industry lobbies had also demanded changes, arguing that the policies are stifling European companies’ competitiveness.

The potential walk-back on ESG rules has met sharp resistance from environmental campaigners, some investors and EU lawmakers.

The proposed changes must win support from the European Parliament and a reinforced majority of the 27 EU member states, meaning there may still be changes.

“They do not simply lower the level of ambition, they eliminate it,” Socialist EU lawmakers said in a Feb 20 letter to Commission President Ursula von der Leyen.

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