A huge effort has been launched by unions, not-for-profits and economists to head off anticipated efforts to water down the EU’s new sustainability reporting rules, ahead of an “omnibus” process to consolidate three pieces of legislation into a single document.

The reporting rules, a key feature of the European Green Deal, have been under attack by member states since last year, when a major report on EU competitiveness asserted they were a “major source of regulatory burden”.

A group of 240 economists, among them leading European academics, have signed an open letter to the EU stating the omnibus process risks a “reduction in the level of climate ambition, rather than an increase in investment”.

The letter adds: “Amid today’s deep economic and geopolitical uncertainties, what companies need above all is for Europe to stay the course so that they can plan over the long term and they need the transition to accelerate to reduce the risks posed by climate disruption.”

Unions too have taken aim at the process, with Isabelle Schömann, deputy general secretary of the European Trade Union Confederation, calling the omnibus process a “deregulation agenda”.

“The general interest as well as the human rights dimensions are being totally overlooked in favour of the demands of a few big businesses with a history of violating workers’ rights and polluting the environment.”

Green under fire

At the heart of the European Green Deal are the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). CSRD is intended to have companies report on how they are reacting to climate change and how they check their supply chains for human rights abuses.

Last year, former European Central Bank chair Mario Draghi issued a report looking at competitiveness, in which he wrote: “The EU’s sustainability reporting and due diligence framework is a major source of regulatory burden magnified by a lack of guidance to facilitate the application of complex rules and to clarify the interaction between various pieces of legislation.”

There was already criticism around of both CSRD and CSDDD, but Draghi’s report effectively declared open season on the new rules. In recent weeks, both the French and German governments have written to the EU for major changes.

Germany has called for a two-year delay in implementation of the CSRD, a change that German chancellor Olaf Scholz described as “urgently necessary” to avoid overburdening companies.

France has gone further, calling for an “indefinite postponement” of the CSDDD.

One academic, Andreas Rasch of Copenhagen Business School, noted on LinkedIn: “Everybody who still thinks that the EU”s omnibus simplification package will just be about a few simplifications and minor alignments is either not well informed or naive.”

Double impact

At stake in the debate over both directives is the scope of which companies will be required to be compliant and whether the CSRD should use “double” or “single” materiality. Double materiality requires companies to report not only on the impact of climate change on their business prospects, but also the impact of their activity on the environment and society.

According to press reports, the omnibus proposals, originally due for late February, have been pushed back to March this year.

Meanwhile, voices in the US have been raised against EU sustainability reporting too. Board Agenda reported that there is concern with the extra-territorial nature of the directives, which means they apply to foreign companies with European operations.

Republican politicians have complained that CSRD should be blocked in order to meet Donald Trump’s “America first” agenda, while the US Chambers of Commerce have written to Congress with a similar complaint saying the EU is imposing “undue regulatory measures”.

US commercial secretary Howard Lutnick recently turned on EU legislation in a submission to the Senate committee for business. In the document, he says the EU is “attempting to harm the competitive advantages of US companies by forcing them to comply with CS3D”.

Whether internal or external, opposition to the components of the EU’s Green Deal is mounting. Those campaigning to have the directive left alone have a fight on their hands, as politicians refocus on competitiveness as a core issue for their economies.