Is the EU planning to simplify the sustainable finance framework?

In the recent years, we have seen the introduction of several new EU sustainability rules: 

• the Corporate Sustainability Reporting Directive (CSRD), which requires in-scope businesses to make mandatory disclosures on a broad range of sustainability topics; 

• the Corporate Sustainability Due Diligence Directive (CS3D), which requires in-scope businesses to conduct mandatory risk-based due diligence and take steps to manage adverse impacts on human rights and the environment; and 

• the Green Taxonomy Regulation (Taxonomy Regulation), which seeks to provide a "common language" for sustainable finance by establishing the criteria that economic activities must fulfil to qualify as "environmentally sustainable". 

In November 2024, the new President elect of the European Commission, Ms Ursula von der Leyen, announced her intention to create an “omnibus” legislative instrument to simplify the administrative procedures and sustainability reporting requirements that are set out in the CSRD, CS3D and the Taxonomy Regulation (the Omnibus). This announcement follows calls from Member States and industry members to lighten the administrative burden of complying with these three pieces of legislation. The proposal for a simplification of the EU sustainability rules comes amid the EU Commission’s renewed emphasis on enhancing competitiveness of EU businesses when compared to their global peers and to create an ecosystem for European investments in the green transition. 

A legislative initiative for the Omnibus has not yet been published and, consequently, the scope, ambition and content of the intended changes are currently unclear.