Is the EU simplifying or weakening corporate sustainability standards?

The European Union has introduced a raft of sustainability regulations to ensure that companies meet certain due diligence and reporting standards. But recent political moves have raised concerns that these laws, still in their infancy, could be weakened before they are even properly implemented. This raises an important question: could the EU further dilute its corporate sustainability laws?

This issue emerged earlier this month when European Commission President Ursula von der Leyen announced plans to “simplify” sustainability regulations as part of an omnibus package to be released in February. While the aim is to reduce redundant reporting requirements and ease the regulatory burden on companies, Sourcing Journal notes, critics fear it could undo progress made to establish the EU’s Corporate Due Diligence Directive (CSDDD).

The CSDDD, together with the Corporate Sustainability Reporting Directive (CSRD) and the European Taxonomy of Sustainable Economic Activities, represents a significant step forward in making companies more accountable for their social and environmental impacts. However, the current proposal from the European Commission has raised concerns, with several left-wing members of the European Parliament fearing that any simplification of these regulations could reverse toughened policies.

In a letter to the Commission, MEPs from the Socialist and Green parties urged von der Leyen to exclude the CSDDD from this simplification process, expressing concerns that “simplification” could lead to “deregulation”. They argue that the essential elements of the EU reporting legislation should not be changed under any circumstances, particularly as it deals with human rights and environmental issues.

The Clean Clothes Campaign, an organisation representing unions and NGOs in the garment industry, echoed these concerns. The group expressed grave concern about the simplification of the rules, which it said could roll back the EU’s pioneering sustainability laws. It pointed to a report by Italian economist Mario Draghi, which von der Leyen cited as justification for the proposed simplifications. The report, which focuses on Europe’s weakened competitiveness, makes only brief mention of sustainability regulations, but von der Leyen’s remarks appear to over-prioritise Draghi’s economic analysis over social and environmental protections.

According to Sourcing Journal, the Clean Clothes Campaign argues that simplifying rules for efficiency reasons cannot be a goal in itself. Instead, the focus must remain on achieving a “fair, just and sustainable economy,” particularly for sectors like garment manufacturing, where workers’ rights are often at risk. The group argues that rolling back these regulations could jeopardise the future of workers’ rights in the EU and hamper the delivery of the EU Green Deal.

Meanwhile, Alexander Kohnstamm, executive director of the Fair Wear Foundation, stressed that rolling back existing regulations would be a “bad idea,” Yahoo Finance reports. He said companies need clarity, and the proposed regulatory changes risk creating confusion. Rather than reorganising the regulatory landscape, he advocates for clearer industry-specific guidelines that allow companies, unions and civil society to work together to make human rights due diligence more effective.

Backlash against stricter rules

This issue is part of a broader trend within the EU. With the European elections leading to a political shift to the right, growing opposition to what business interests see as overly burdensome rules has emerged. Some EU member states, such as Germany, have led efforts to delay or scale back ambitious climate and sustainability targets. This political shift has been particularly evident in the EU’s corporate sustainability reporting standards, which will come into force in 2025 for all 27 member states.

In Germany, several ministries have proposed changes to the corporate sustainability reporting framework, arguing that the regulations are too complex and burdensome for companies, says Susanna Arus, EU public affairs manager at Frank Bold. However, these proposals have been criticised for undermining the transparency and accountability that the CSRD seeks to establish within European companies.

Countries such as Denmark, Sweden and Spain have already expanded previous legislation to include more companies in sustainability reporting requirements, and they warn that such proposals from Germany could create legal uncertainty and undermine efforts to support companies in their transition to sustainable practices. The CSRD is seen as a key tool to ensure a level playing field, promoting transparency and combating greenwashing.

A threat to long-term sustainability goals

The push to weaken sustainability laws is not just a political debate — it is an economic issue with potentially far-reaching consequences. The CSRD and its associated regulations aim to address market failures by creating a coherent set of reporting standards that companies can use to assess and mitigate their environmental and social impacts. These regulations also play a critical role in guiding sustainable investments and ensuring that capital is directed towards activities that support the EU’s long-term environmental and social objectives.

If these regulations are weakened or diluted, it could harm the EU’s efforts to combat climate change, protect human rights and foster a fair and sustainable economy. Moreover, such changes could send the wrong message to businesses, suggesting that compliance with sustainability standards is optional or secondary to short-term concerns about profits.

The Clean Clothes Campaign, in its statement, stressed that this is a defining moment for the EU. Simplifying regulations for the sake of efficiency should not compromise the core objectives of the EU Green Deal. For the EU to remain a global leader in the fight for a just and sustainable future, it must ensure that it does not lose sight of its long-term goals.

The EU's eternal challenge: Finding the balance between regulation and innovation

As the EU faces political and economic pressure to simplify its regulatory framework, the challenge will be to strike a balance between reducing administrative burdens and preserving sustainability objectives. There is no denying that businesses need clarity, but this clarity must not come at the expense of accountability.

The key to achieving a sustainable future lies in a collaborative approach involving governments, businesses, trade unions and civil society. Rather than weakening regulations, policymakers should focus on developing practical and effective rules that can produce concrete improvements in sustainable practices across industries.

In the coming months, the EU will need to carefully consider the long-term implications of its regulatory decisions. By focusing on sustainability and human rights rather than short-term political pressures, the EU can ensure that it remains a global leader in the fight for a just and sustainable future.

This article originally appeared on FashionUnited.FR. It was translated to English using an AI tool called Genesis and edited by Rachel Douglass..

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