18-03-2025
Will fewer corporate reporting obligations jeopardise the EU Green Deal?
The Omnibus package aims to simplify four sets of rules and has been welcomed by the business sector because it reduces obligations to report on their performance on environmental and social issues, as well as due diligence on their supply chains.
"Competitiveness is the new motto of this Commission, just as the Green Deal was the motto of the previous mandate led by Ursula von der Leyen. The idea is to cut red tape by 25% for companies, with a target of 35% for SMEs. The Commission says it's not deregulation, it's just simplification," says Gregoire Lory, who covers Green Deal policies for Euronews.
The proposal also aims to exempt smaller companies from import tax to offset polluting emissions and to help mobilise more private investment. The EU executive says €6.3 billion in annual administrative costs would be saved and €50 billion in additional public-private investment would be mobilised.
However, unions and environmental organisations fear the consequences, as only one in five companies would be required to make environmental reports. Checks on supply chains would be limited to the largest 10,000 companies.
'The weakening of the due diligence requirement by imposing these requirements only on direct suppliers is really worrying because, in a very significant number of cases, the harm happens beyond the EU. Around 80% to 90% of environmental and human rights abuses actually happen outside the EU,' argued Anaïs Berthier, director of ClientEarth's Brussels office.
"The Commission wants to simplify, it is not advocating moving away from the Green Deal objectives. What they are doing is trying to align competitiveness with sustainability and the comprehensive growth strategy," said Levin Spiegel, policy adviser at Eurochambers.
The EU executive has asked co-legislators to treat this package as a priority, which will have to be negotiated with the governments of the 27 member states and the European Parliament.
This promises to be a heated political debate and will be an important test of Commission President Ursula von der Leyen's ability to forge alliances in the European Parliament.
"The centre-right EPP, which pushed for the Omnibus Package, holds the presidency of the Commission, has the largest group in Parliament and the support of many leaders in the European Council. However, the EPP will need to build a majority," says Gregoire Lory.
The centre-right may seek support from radical right parties, rather than the traditional coalition with the S&D (centre-left) and Renew Europe (liberal). The Green Party has been one of the most vocal parties against the proposal.
Some analysts point to the current geopolitical situation of major trade disruptions and a race for resources as justification for the EU to focus on reforms that boost business competitiveness.
Levin Spiegel agrees, adding that Eurochambers supports 'this important step' with the expectation of further legislative action to tackle high energy costs and skills shortages.
But environmental organizations like ClientEarth warn that "it is not at all strategic in the long term". "The climate, biodiversity and pollution crisis will not stop just because of the Trump administration (USA) and the EU must really stick to its values, its laws, its principles," said Anaïs Berthier.
Germany's parliament on Tuesday passed a historic bill unlocking a record level of state borrowing for defence and infrastructure through amending the country's constitutionally enshrined fiscal rules.
The vote made it through the parliament with 513 votes in favour — above the 489 votes required.
The law still needs a two-thirds majority in the Bundesrat, Germany's lower house representing the country's states, to become law.
The crucial vote in the Bundestag followed weeks of debate sparked when Merz's Christian Democratic Union (CDU) and would-be coalition partners Social Democrats (SPD) unveiled plans to unleash hundreds of billions in spending through loosening Germany's constitutionally-enshrined "debt brake."
Merz faced a tense race to push the proposal through ahead of the new parliament convening on 25 March, where the far-left Die Linke and far-right Alternative for Germany (AfD) would have the ability to block the package.
The Greens were originally reluctant to offer their support of the bill until Merz last week gave the party guarantees that €100 billion of the special fund would be directed to supporting climate economic transformation measures.
The historic deal marks a shift away from decades of fiscal conservatism. Out of the proposals, defence spending above 1% of Germany's gross domestic product is effectively exempt from the country's "debt brake", which was written into the constitution in 2009.
A €500 billion special fund will also be created to finance infrastructure projects outside of the ordinary budget over the next decade, and give Germany's 16 states leeway to borrow the equivalent of around €15 billion.
Merz — who campaigned against reforming the debt brake throughout his career — has framed his U-turn necessary in response to a changing security landscape.
"Our friends in the EU are looking to us just as much as our adversaries and the enemies of our democratic and rules-based order," Merz said on Tuesday ahead of the vote.
Defence Minister Boris Pistorius defended the decision to lift fiscal rules to invest in Germany's defence, including its woefully underfunded army.
"Our security must not be jeopardized by budgetary constraints," Pistorius said, adding that "anyone who hesitates today is denying reality."
Some of the strongest criticism in parliament on Tuesday came from the AfD and the liberal Free Democratic Party (FDP), the latter who tried to derail the package by suggesting a last-minute change.
The German stock market and the euro reacted positively ahead of the vote, which experts have said has the power to bring Germany out of its two years of poor economic growth.
Most economists are in favour of incurring debt to finance additional security and defence needs, but have repeatedly noted that the infrastructure package should be accompanied, or replaced, by strong reforms in other areas according to economic thinktank Ifo.
Reforms in bureaucracy, pension, energy, as well as addressing the country's dire workforce shortage are desperately needed, experts say.
President of the Berlin-based economic research institute DIW Berlin, Marcel Fratzscher, reiterated to Euronews that, "We need reforms in bureaucracy and the workforce in other areas so that such investments can be implemented at all."
"The package would be a very important step in the right direction, but that alone will not be enough. We need a reform of the debt brake, to bring investments in infrastructure, education, defence permanently into the federal budget."
The law still needs a two-thirds majority in the Bundestag, Germany's lower house.
Here, the CDU, SPD, and the Greens need the backing of another party to ratify the legislation.
