In a major pivot, the EU Parliament has recently voted on several measures to reduce the “red tape” associated with the Green Deal in December 2025. This is driven by a new political consensus that heavy reporting requirements are making European companies less competitive compared to those in the US and China.
Key Regulatory Cuts & Changes
- Postponement of Sector-Specific Standards: The Parliament voted to delay the adoption of specific ESG reporting standards for high-risk sectors (like mining and textiles) by two years. This gives companies more breathing room to adapt to general rules first.
- Threshold Increases for SMEs: There is a significant move to raise the “size thresholds” that determine which companies must comply with the Corporate Sustainability Reporting Directive (CSRD). This effectively exempts thousands of medium-sized businesses from mandatory ESG disclosures.
- CSDDD Scaling (Due Diligence): The Corporate Sustainability Due Diligence Directive (CSDDD) – which holds companies liable for environmental and human rights abuses in their supply chains – was significantly watered down. The number of companies covered was slashed by roughly 70%, and the implementation timeline was pushed back.
- The “One-In, One-Out” Rule: The Commission is now applying a stricter “burden reduction” policy, meaning for every new regulation introduced, an old one must be removed to simplify the bureaucratic load on businesses.
Why this is happening now?
- Economic Pressure: High energy costs and inflation have pushed “industrial competitiveness” to the top of the agenda, displacing “climate leadership” as the #1 priority.
- Political Pushback: The “Green Backlash” (or “Greenlash”) from farmers and industrial lobbies influenced recent elections, leading to a Parliament that is much more skeptical of aggressive environmental mandates.
In conclusion, while the core goals of the Green Deal remain, the enforcement and reporting side is being simplified. Companies are still expected to transition to net-zero, but the EU is moving away from “policing” every single data point in favor of a more flexible, business-friendly approach.
Full details can be read from the following press release from the European Parliement: