As pressure mounts to streamline corporate regulation in Europe, over 200 leading businesses and investors have issued a clear warning to the European Commission: don’t dilute the EU’s sustainability ambitions in the name of simplification. Among these are Aldi South Group and H&M Group. The controversy centres on the EU Omnibus, the Commission’s proposed revisions to key sustainability reporting directives. For businesses committed to long-term value creation, this moment may mark a turning point in how business sustainability strategies are supported, measured, and enforced across the EU.
What is the EU Omnibus — and why now?
The EU Omnibus 1 is part of the European Commission’s effort to reduce administrative burdens on companies, particularly as economic headwinds and capital costs continue to challenge business resilience. Under current proposals, reporting obligations would be cut by 25 percent for large private firms and 35 percent for SMEs.
The review directly affects two key pillars of the EU’s sustainable finance and accountability agenda:
- The Corporate Sustainability Reporting Directive (CSRD), which broadens non-financial disclosure requirements for large businesses.
- The Corporate Sustainability Due Diligence Directive (CSDDD), which mandates human rights and environmental risk assessments across supply chains.
While the Commission argues that simplification is necessary, critics say the proposals risk unravelling years of policy progress designed to build more sustainable, transparent, and competitive markets.
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The business case for maintaining strong rules
In an open letter to EU policymakers, H&M, Aldi South, Nestlé, Allianz, Ikea, Nokia, and others make a strong business case: weakening sustainability reporting rules would be a step backwards for both corporate accountability and competitiveness.
“Sustainability rules are not red tape,” said Anke Ehlers, Aldi South Group’s Managing Director for International Sustainability. “They are the foundation for long-term competitiveness.”
The letter warns that eliminating key elements, like double materiality assessments, transition plan mandates, and interoperability with global standards like those of the International Sustainability Standards Board (ISSB), could disrupt cross-border coherence and undermine investor confidence.
Moreover, a core issue under review is whether transition plans should remain enforceable. The current proposal would allow companies to develop such plans, but not require them to act on them — a significant departure from earlier policy ambitions.
The open letter urges the Commission to preserve the obligation to implement transition plans “through best efforts,” ensuring these plans are more than mere declarations. Properly executed, such plans link decarbonisation targets with operational investments, workforce capacity, and long-term strategy.
Conclusion: Don’t undermine progress, enable it
At a time when global stakeholders demand clarity, consistency, and action from businesses, rolling back corporate sustainability directives sends a mixed message. What companies need now is not less regulation, but better, clearer frameworks that support credible business sustainability strategies and level the playing field across industries.
For business leaders, this moment is an opportunity to reinforce internal capability — especially in how sustainability performance is measured, disclosed, and communicated. If your team is navigating the evolving EU regulatory landscape, explore our sustainability reporting course. Learn how to align with global standards, avoid greenwashing risks, and build confidence in your disclosures.
Dedicated to harnessing the power of storytelling to raise awareness, demystify, and drive behavioural change, Bronagh works as the Communications & Content Manager at the Institute of Sustainability Studies. Alongside her work with ISS, Bronagh contributes articles to several news media publications on sustainability and mental health.
