For more than two months now, European politics has been all about “competitiveness”. Any argument is now good enough to roll back whole swathes of legislations designed to help Europe achieve its climate objectives while protecting human rights and promoting long-term economic growth. While the proponents of deregulation have taken the front stage at the end of 2024, a counter-narrative is emerging through the voice of NGOs, trade unions, academics, as well as economic and financial players. This article looks back at the numerous platforms and open letters – collected in a specific note – denouncing the unravelling of European texts, and arguing for their preservation.
Defending sustainability legislation
The European directives CSDD (Corporate Sustainability Due Diligence Directive) and CSRD (Corporate Sustainability Reporting Directive) are at the heart of the transformation of the European economy, but are facing attempts to dismantle them under the guise of simplification through the European Commission’s “Omnibus” proposal.
The many voices who have rallied to defend the CSDD and CSRD (investors, companies, NGOs, academics…) directives point out that they are not useless bureaucratic constraints, but rather essential tools for transforming the economy over the medium and long term, thus enabling economic and financial players to adapt with a net-zero strategy by 2050. It is thanks to these laws, and notably through the requirements to adopt transition plans they include, that companies will be better able to anticipate the necessary changes as well as the risks associated with global warming. By mobilizing around non-financial issues, companies can integrate social and environmental challenges into their business models and position themselves as driving forces in favor of transition. As the Mouvement Impact France points out regarding CSRD, “this directive is a key lever for competitiveness and protection for the European economy, and for resilience for our companies.” The transparency and responsibility promoted by these directives are essential assets for attracting investment, building customer loyalty and motivating employees.
Moreover, these regulations are enabling financial institutions to redirect their financing towards the transition and, at last, to make the difference between players who have the will to transform the economy and those who practice greenwashing. Non-financial information has also been expressly requested by financial players. This is confirmed by investors representing some 6.6 billion euros in assets under management, who call on the European Commission to “preserve the integrity and ambition of the EU sustainable finance framework.”
Fears of a major step backwards
The numerous statements on the omnibus law share a deep concern about the Commission proposal. The directives on sustainable finance were the result of laborious, lengthy compromises, incorporating flexibility and proportionality mechanisms so as not to impose excessive burdens on companies (1). The Omnibus would mean abandoning this compromise – reached by legislators with the involvement of all stakeholders (companies, NGOs, academics, etc.) – without following democratic consultation and under international pressure (2).
The directives attacked are tailored to concerned companies. For example, the CSRD does not cover small and medium-sized businesses in general, while those that are covered benefit from lighter reporting standards. The same is true of the CSDDD, which only applies directly to very large companies, and includes specific provisions to consider its indirect effect on SMEs. It is precisely by touching on this recent legislation that the climate of regulatory uncertainty will affect companies, favoring those who have not yet begun their transition over those who have already made efforts in this area. Going back on these texts would call into question the credibility of European directives and commitments on climate or human rights, and would discourage companies from fully committing to the ecological transition. Indeed, as the Collège des Directeurs du Développement Durable emphasizes, it is crucial to “respect the original intention of the co-legislators and the broader Green Deal agenda.” (3) Against this backdrop, many business representatives are opposing the far-reaching European Commission proposal and pushing instead targeted simplification measures – especially in the area of reporting – which often do not require the reopening of European texts and which preserve all their essential features.
The coalitions of economic and financial players, NGOs and academics that have emerged in support of the European sustainability texts and the Green Deal are sending a strong signal to policymakers: deregulation is not a valid option. Corporate supporters emphasize the notion of sustainability as a driver of competitiveness. Financial players stress the importance of transparency and responsibility in directing capital towards sustainable activities. Academics stress the need to base policies on sound scientific data, and warn against “the threat of a European unravelling” of regulatory advances. Finally, NGOs put climate and human rights issues back at the center of the debate. The sustainability laws under attack are the European Union’s roadmap for achieving its objectives, and the European Commission and French government must renounce emptying them and focus on effective implementation instead.
