Regulating regulation has become a defining feature of the European Commission’s agenda. Over the past year, six Omnibus packages – legislative bundles intended to simplify EU rules by folding multiple amendments into a single act – have been pushed through at speed, reopening recently agreed legislation across a wide range of policy areas.
Several are now in their final stages. The European Parliament approved on 16 December a provisional agreement between MEPs and EU governments on updated sustainability reporting and due diligence rules for companies (Omnibus I).
Presented as a simplification exercise, the environmental omnibus is framed as an effort to boost competitiveness by reducing administrative burden, aligning procedures, and making EU rules easier to implement - not to weaken environmental ambition. That distinction matters.
Simplification can be an asset for the green transition. The question is whether it is being used to clarify Europe’s direction or to quietly adjust it under political pressure.
That pressure has intensified as EU policymakers reassess how much regulatory ambition Europe can sustain in a more contested global economy. The deterioration of the transatlantic relationship, marked by growing US coercion, has added to this strain.
In a recent op-ed in Financial Times, Andrew Puzder, the US ambassador to the EU argued that Europe’s environmental rules are “killing growth” and urged the bloc to embrace cheap US energy if it wants to compete - reinforcing a familiar narrative that pits EU regulation against economic strength.
At the same time, China has stepped up its use of economic pressure, including restrictions on access to rare earths, offering a stark reminder of Europe’s strategic vulnerabilities.
Combined with the ongoing war in Ukraine and growing uncertainty over the durability of US security guarantees and the NATO alliance, this geopolitical context has sharpened the sense in Brussels that the EU must demonstrate competitiveness and strategic responsiveness - and do so quickly.
Recasting the political momentum
Against this backdrop, simplification has increasingly emerged as a political answer. The environmental omnibus, amending the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), illustrates how a debate about delivery can slide into a reassessment of substance.
Under the package (Omnibus I) recently approved, the scope of the CSRD is narrowed sharply. Reporting obligations will now apply only to companies with at least €450 million in turnover and 1,000 employees, removing around 90 per cent of companies that would previously have fallen within scope.
The CSDDD is restricted further still. Due-diligence obligations will apply only to companies with more than 5,000 employees and €1.5 billion in turnover, while the requirement for mandatory climate transition plans has been dropped entirely.
Compliance timelines are extended to around 2029, penalties are capped at 3 per cent of global turnover, and liability is pushed back to the national level.
Each of these changes can be defended individually on proportionality grounds. Taken together, however, they significantly alter the reach and function of the EU’s sustainability framework. The changes alter not just how the rules operate, but what they are expected to deliver.
Competitiveness, misdiagnosed
Competitiveness is the central justification for this shift. Europe does face real economic challenges including sluggish growth, high energy prices, and difficulty scaling new technologies. However, environmental regulation is not the binding constraint.
Europe’s competitiveness problem is structural. Fragmented capital markets, underinvestment in infrastructure and innovation, slow permitting, and limited industrial scale matter far more than sustainability reporting or due-diligence requirements. Treating environmental rules as one of the primary obstacles risks diverting attention from these deeper weaknesses.
More fundamentally, competitiveness and decarbonisation are no longer in tension. For Europe, staying competitive increasingly depends on scaling clean technologies and providing a stable low-carbon framework for industrial investment. Slowing the pace of decarbonisation does not buy competitiveness, it delays it.
The consequences of this shift are not confined to the EU’s internal market. For years, the EU’s influence as a climate actor has rested not only on rhetoric, but on its ability to translate ambition into durable rules - and to stand by them.
At a moment when climate policy is increasingly intertwined with trade, industrial strategy, and geopolitical competition, early signs of hesitation matter. Recalibrating recently agreed climate rules risks blurring the EU’s position just as other major powers reassess their own approaches and watch closely how far Europe is prepared to defend its commitments. In that context, credibility is not an abstract asset, it is a source of leverage.
A political fault line
The tensions surrounding simplification now cut across the EU’s institutions. Within the Commission, Executive Vice-President Teresa Ribera has openly challenged the direction the agenda is taking, warning that efforts framed as simplification risk sliding into deregulation.
In the Council, member states have actively shaped the trajectory of the sustainability omnibus, amid diverging views on how far simplification should go. While some capitals have argued for streamlining implementation without weakening ambition, others have pushed for wider exemptions and longer timelines, particularly in areas such as reporting and due-diligence obligations.
In the European Parliament, the file has been driven through by shifting majorities spanning the centre-right, right-wing, and far-right, reflecting changing coalition incentives rather than a settled consensus on climate policy.
The European Ombudsman found procedural shortcomings in how the European Commission prepared legislative proposals that it considered urgent. As regards Omnibus 1, the consultation time between Commission departments was reduced to less than 24 hours over a weekend. Taken together the shortcomings amounted to maladministration. This has reinforced a sense of institutional strain around how simplification is being pursued.
None of this makes simplification the wrong objective. On the contrary, simplification is essential if the green transition is to succeed. However, it must be used to strengthen delivery, not to obscure political choices, and clarity and predictability should not be sacrificed to speed and signalling.
Effective simplification clarifies objectives, aligns timelines, reduces duplication, and improves guidance. It makes the EU’s direction easier to understand and follow, not harder to discern. Businesses are not asking for the green transition to be abandoned. They are asking for clarity about where Europe is going and how it intends to get there.
Again, the distinction matters. Simplification that sharpens direction, reinforces credibility at home and abroad. Simplification that quietly lowers ambition does the opposite. Europe’s challenge today is not excessive climate policy but the political confidence to defend it under pressure.
