Cutting down on red tape to help boost companies’ competitiveness is the aim of a European Commission proposal to simplify corporate reporting obligations. But critics of the so-called Omnibus package claim the proposal is a step back for human rights and the environment.
The Omnibus package aims to simplify four sets of rules and has been welcomed by the business sector because it reduces obligations to report on their performance on environmental and social issues, as well as due diligence on their supply chains.
“Competitiveness is the new motto of this Commission, just as the Green Deal was the motto of the previous mandate led by Ursula von der Leyen. The idea is to cut red tape by 25% for companies, with a target of 35% for SMEs. The Commission says it’s not deregulation, it’s just simplification,” says Gregoire Lory, who covers Green Deal policies for Euronews.
The proposal also aims to exempt smaller companies from import tax to offset polluting emissions and to help mobilise more private investment. The EU executive says €6.3 billion in annual administrative costs would be saved and €50 billion in additional public-private investment would be mobilised.
However, unions and environmental organisations fear the consequences, as only one in five companies would be required to make environmental reports. Checks on supply chains would be limited to the largest 10,000 companies.
“The weakening of the due diligence requirement by imposing these requirements only on direct suppliers is really worrying because, in a very significant number of cases, the harm happens beyond the EU. Around 80% to 90% of environmental and human rights abuses actually happen outside the EU,” argued Anaïs Berthier, director of ClientEarth’s Brussels office.
“The Commission wants to simplify, it is not advocating moving away from the Green Deal objectives. What they are doing is trying to align competitiveness with sustainability and the comprehensive growth strategy,” said Levin Spiegel, policy adviser at Eurochambers.
Heated political debate to follow
The EU executive has asked co-legislators to treat this package as a priority, which will have to be negotiated with the governments of the 27 member states and the European Parliament.
This promises to be a heated political debate and will be an important test of Commission President Ursula von der Leyen’s ability to forge alliances in the European Parliament.
“The centre-right EPP, which pushed for the Omnibus Package, holds the presidency of the Commission, has the largest group in Parliament and the support of many leaders in the European Council. However, the EPP will need to build a majority,” says Gregoire Lory.
The centre-right may seek support from radical right parties, rather than the traditional coalition with the S&D (centre-left) and Renew Europe (liberal). The Green Party has been one of the most vocal parties against the proposal.
Some analysts point to the current geopolitical situation of major trade disruptions and a race for resources as justification for the EU to focus on reforms that boost business competitiveness.
Levin Spiegel agrees, adding that Eurochambers supports “this important step” with the expectation of further legislative action to tackle high energy costs and skills shortages.
But environmental organizations like ClientEarth warn that “it is not at all strategic in the long term”. “The climate, biodiversity and pollution crisis will not stop just because of the Trump administration (USA) and the EU must really stick to its values, its laws, its principles,” said Anaïs Berthier.
