Council supports sweeping cuts to EU sustainable finance rules

24 June 2025 - 11:16 h

Media Alert

Today, the Council adopted its general approach on the Commission’s Omnibus proposal, aimed at cutting sustainability reporting and due diligence obligations for companies. What was initially presented as a simplification exercise has become a vehicle for sweeping and poorly targeted deregulation. The Council has backed drastic cuts, going even further than the Commission’s original proposal.

It supports reducing the scope of the Corporate Sustainability Reporting Directive (CSRD) by 80% and the EU Taxonomy by 85%. On top of this, the Council proposes limiting the Corporate Sustainability Due Diligence Directive (CSDDD) to companies with more than 5,000 employees (up from 1,000) and a turnover above €1.5 billion (up from €450 million). This would mean exempting the vast majority of large companies from due diligence obligations

The Commission, Parliament and Council are in a game of legislative limbo, seeing how low they can go on sustainable finance rules.

For Omnibus I, as for many other legislative files, we are witnessing a race to the bottom that excludes any rational analysis. Legislators are pushing for a polarisation of the debate, where form takes precedence over substance. Instead of addressing issues through a technical lens, there is a clear push for drastic deregulation without assessing the impact or even questioning whether the proposed solution fits the problem.

Vincent Vandeloise, Senior Research and Advocacy Officer

The stated aim of these changes is to ease pressure on smaller businesses and reduce administrative burdens. But the proposed approach misses the mark. When the dust settles, small businesses will still be asked to disclose, not just through one EU standard, but through a series of uncoordinated requests from banks, clients and investors.

Markets need sustainability data to make decisions. If the EU doesn’t provide a standardised route, they’ll find their own, and companies will face fragmented, duplicative demands that are harder and costlier to meet.

Thoughtful reform means simplifying the number of data points, not reducing the number of companies. A framework which streamlines disclosure requirements and applies them consistently across relevant firms, gives markets the data they need and companies a clear, predictable path to compliance.

Vincent Vandeloise, Senior Research and Advocacy Officer