The European Commission proposed on Wednesday to significantly relax the requirements for businesses and report on the social and environmental impacts of the business.
The proposal limits the rules to businesses with more than 1,000 employees and companies with more than 50 million euros ($53 million). This means that approximately 80% of companies currently covered by the directive will be exempted.
The committee is trying to simplify regulations that hinder businesses from investing and growth. European officials are increasingly concerned about a decline in economic competitiveness, especially when compared to the US and China. These concerns have been exacerbated since President Trump returned to the White House.
Trump's push to ease corporate rules has widened the regulatory gap with Europe. The EU committee also said changes are needed to strengthen the region's economy.
“The world is changing right before our eyes,” said Bardis Dombrovskis, the European Commissioner of Economics, citing US opposition to a UN resolution condemning Russian invasion in Ukraine.
Building a more competitive economy and cutting the deficit is an important part of navigating this “complex” environment, he said. “We can't expect or expect one hand to be tied behind our back and compete in a dangerous world,” he added.
Regarding reporting rules known as the Corporate Sustainability Reporting Directive, the committee also proposed two years behind for businesses that need to report this year and next year. The committee said these changes and related measures would save businesses around 6 billion euros per year on administrative work.
The change must be approved by the European Parliament before it becomes effective.
The European Union was a pioneer in designing and implementing rules on climate change and corporate sustainability, but on Wednesday the committee said these efforts had gone too far.
During the “intensive” period of regulatory activities over the past five years, Dombrovskis said it “created a significant regulatory burden on people and businesses.”
French President Emmanuel Macron was a major supporter of loosening corporate rules last month, claiming that Europe should take a “massive regulatory break.”
It was painful to say at a press conference in Brussels that “simplification” was not the same as deregulation, and that it was not a sign of giving up the committee's green agenda. Financial Services Commissioner Maria Luís Albukerque said he expected many companies to voluntarily follow the sustainability reporting rules as they either already made their own commitments or report under simpler guidelines as members of large corporations' supply chains.
The proposal “is intended to reduce burdens and reporting costs, but to maintain anchors for green trading purposes,” Albuquerque said.
The committee on Wednesday also announced a series of measures called the Clean Industry Contract, which aims to decarbonise the European economy. On the same day, European energy giant BP said it would increase its spending on oil and gas while significantly reducing its investment in clean energy.
