By: Sherry Madera, CEO of CDP
Europe is at a crossroads. Now is the time to double down on climate action.
In the long arc of history, progress rarely travels in a straight line. But in moments of crisis, retreat can carry profound consequences. Europe now finds itself at one of those moments.
The European Union is showing signs of reversing course on environmental policy—just when it should be accelerating. The European Commission’s proposed Omnibus Simplification Package represents a significant weakening of green legislation, most notably a dramatic scaling back of the Corporate Sustainability Reporting Directive (CSRD). Far from a necessary simplification, this move threatens to undo years of environmental leadership, undermine corporate transparency, and jeopardize long-term economic resilience.
A Dangerous Step Backwards
The CSRD, only recently enacted, is central to the EU’s broader sustainability strategy. It requires large and listed companies to report standardized data on environmental, social, and governance performance—creating a consistent and transparent foundation for investors, regulators, and the public.
Yet under the Omnibus proposal, the scope of the CSRD would shrink drastically. New analysis from CDP reveals that of the 11,000 companies that reported environmental data through the full 2024 CDP questionnaire, 83% (9,181 companies) would have met the original CSRD requirements. Under the proposed changes, that figure drops to 5,465—a 40% reduction. Thousands of companies already demonstrating transparency and responsibility would be exempted from future obligations.
This is not streamlining. It is backsliding. It strips investors of the environmental risk data they need to make informed decisions. It undercuts businesses that have invested heavily in disclosure and sustainability. And most alarmingly, it could threaten financial stability in the Eurozone—as European Central Bank supervisors have explicitly warned.
Sustainability Is a Competitive Advantage
In April, the Commission announced delays in applying parts of the CSRD and due diligence requirements. Paired with the proposal to remove around 80% of companies from the directive’s scope, these decisions risk dismantling the policy foundation that supports stable, sustainable finance markets across Europe.
Built through years of rigorous debate and consultation, Europe’s green framework has provided much-needed clarity for businesses and financial institutions. The EU’s abrupt shift on sustainability regulation reflects political pressures and short-term anxieties more than sound economic or scientific reasoning.
Some argue that loosening green rules will help Europe stay competitive. But the evidence suggests the opposite. European companies disclosing through CDP have identified €3.47 trillion in climate-related business opportunities—compared to a cost of just €620 billion to realize them. That’s a nearly six-fold return.
In short, sustainability isn’t a drag on the economy—it’s a catalyst for growth. Companies that embrace green practices aren’t just future-proofing their operations; they are seizing the economic high ground. The EU should be championing these leaders, not changing the rules to reward inaction.
The Data is Working—Why Abandon It?
Critics often claim that mandatory disclosure is a burden. But in reality, it is working—and driving real change. 80% of companies listed on European stock markets are already voluntarily disclosing environmental data through CDP. These businesses understand that transparency builds resilience. Between 2022 and 2023, companies in Europe reduced emissions by 3% while growing revenue by the same amount.
This is not theory. It is proof that sustainability and economic performance are not mutually exclusive—they are increasingly intertwined.
Moreover, rolling back sector-specific reporting standards, as proposed in the Omnibus package, would deprive markets of essential data. Without standardized, sector-level metrics, investors cannot properly assess risk, and companies cannot benchmark or plan effectively. Even SMEs—often presumed too small to comply—are already stepping up, with over 12,500 reporting through CDP’s SME questionnaire.
Staying the Course Is the Only Responsible Choice
Europe’s green leadership has always been both a moral and economic imperative. But that leadership only holds if the EU stays the course. If it too begins to unravel its environmental commitments, Europe risks joining a growing list of economies retreating from the future instead of preparing for it.
With the U.S. stepping back, the EU has a chance to step forward—and become the undisputed global standard-bearer for sustainable growth.
Of course, rules can and should be improved for clarity and usability. But simplification should reinforce, not erode, environmental standards. The solution is to work with businesses—especially SMEs—to ease compliance and improve access to capital and support systems. What we cannot afford is to throw out the framework that is already delivering results.
A Time for Clarity, Not Compromise
The EU stands at a defining moment. It can yield to short-term pressures and step back from its sustainability commitments—or it can lead with purpose and hold the line. There is no ambiguity in the science, and increasingly little in the economics. Sustainability is not an optional add-on. It is the foundation of a resilient, modern, and competitive European economy.
The world is watching. Europe has already shown that it can lead. Now it must show that it can endure.
