Ombudsman Investigation Into EU Sustainability Reporting Bill Moves Forward

Forbes

24-07-2025

Teresa Anjinho
In April, a group of climate change organizations filed a complaint with the European Ombudsman asserting that the European Commission failed to follow the proper process in drafting legislation to reduce sustainability reporting requirements. To the excitement of sustainability activists, on May 21, the Ombudswoman announced she was opening an official investigation. That investigation has now moved forward, with the official submission of questions to the Commission. However, given the timeline and limited authority of the Ombudsman, the inquiry will have little impact on the final outcome.
In November, the new leadership of the European Commission proposed the Omnibus Simplification Package to reduce the scope of the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive. The proposal by the Commission was negotiated behind closed doors and largely held secret until the final draft was approved.
The Commission's proposal was then sent to the Council and the Parliament. Each body will debate their respective positions, before the three enter into a trilogue to come to a final proposal. While the normal process of negotiating a new directive can takes years, it is expected that the final package will be adopted in the fall. The accelerated timeline has concerned some sustainability advocates who believe reforms deserve more study and public debate.
In an effort to bring to thwart the reforms, in April, a complaint was filed to the European Ombudsman by 'eight civil society organizations': ClientEarth, Notre Affaire à Tous, Clean Clothes Campaign, European Coalition for Corporate Justice, Global Witness, Transport & Environment, Antislavery International and Friends of the Earth Europe.
On May 21, Teresa Anjinho, the European Ombudswoman, announced an official inquiry into the complaint. The case is titled 'The European Commission's failure to comply with its 'Better regulation guidelines' in preparing a legislative proposal on corporate sustainability reporting and due diligence.'
On June 16, the Ombudsman's office met with Commission staff to discuss the inquiry. Following the meeting, the Ombudsman announced she believed written responses were necessary. There are four main topics the Ombudsman wants addressed: the impact assessment, public consultation, the climate consistency assessment, and the Inter-Service Consultation.
Under the EU's Better Regulation Guidelines, new legislation is required to go through a an assessment to determine what economic, environmental or social impacts the proposal may have. The Commission did not conduct an impact assessment for the simplification proposal.
Addressing the absence of an impact assessment, the ombudsman stated, "While the legislative proposal in question would, in principle, have required a full-fledged impact assessment, the Commission did not conduct one, preparing instead an analytical document, in the form of a staff working document."
"In its explanatory memorandum, the Commission justified the 'critical urgency' of the proposal, and the related derogation from the impact assessment requirement, with the need to maintain the competitiveness of EU businesses… However, the Commission did not indicate any sudden or unexpected event that would justify the urgency."
Similarly, new proposals are required to go through a public consultation to allow stakeholders the opportunity to provide input. The Commission held meetings in February with a selected group of stakeholders, but did not open it to broader input.
Addressing the absence of a public consultation, the Ombudsman stated. 'I understand that in this case the Commission considered that a public consultation was not required… nor was it feasible…."It is not clear how the stakeholder exchanges referred to in the explanatory memorandum meant that a public consultation would not have added new information, in particular considering that many stakeholders that could have contributed otherwise were not invited to participate in the February 2025 meetings."
Addressing the absence of a climate consistency assessment, the Ombudsman stated, "in accordance with the European Climate Law, the Commission is required to conduct a climate consistency assessment of any draft measure or legislative proposal 'and include that assessment in any impact assessment accompanying these measures or proposals, and make the result of that assessment publicly available at the time of adoption'… It appears therefore that the Commission did not carry out a climate consistency assessment before adopting the legislative proposal in question, although the European Climate Law does not foresee any exemptions from conducting such an assessment."
Finally, addressing the lack of the Inter-Service Consultation (ISC), the ombudsman stated the "Commission's rules of procedure foresee a formal ISC of 'the services with legitimate interest on account of the nature, subject-matter or impact of the draft act'. Normally, the services consulted in an ISC are given ten working days to review the proposal and to reply. 'In exceptional cases, and on duly justified grounds of urgency', the rules of procedure allow for the possibility of a Fast-Track ISC with a shortened time frame of 48 hours… For the proposal at hand, the ISC was concluded within 24 hours.'
While the Ombudsman has the authority to conduct the investigation and produce a final report, authority to enforce recommendations is limited. 'The Ombudsman may be able to solve your problem simply by informing the institution concerned. If more is needed, every effort is made to reach an amicable solution that will put matters right. Should this fail, the Ombudsman can make recommendations to the institution. If these are not accepted, the Ombudsman can draw up a special report to the European Parliament, which must then take appropriate action.'
However, once the report is sent to the Parliament, it becomes a political process. The report is sent to a committee that decides if further action is necessary. That committee can submit a motion for a resolution by the Parliament. That process can take months.
Even if the Ombudsman finds the process was was flawed, the report will have minimal impact on the Omnibus package. The Commission was given a deadline of September 15 to respond to the questions. Following the Ombudsman's procedures, the final report may not be issued until the end of the year, after the reforms to sustainability reporting have been approved. The focus of the Ombudsman appears to be on future Omnibus proposals and ensuring the process is followed moving forward.