EU Moves to Ease Corporate Green Reporting Rules

BRUSSELS, Belgium, 6 February ​2025 – An expert group on sustainable financing advising the ​European Union has proposed ​significant changes to the block’s green investment regulations, with a view to reducing the burden of corporate information by one third. The recommendations are the result of increasing pressure from Member States and businesses to simplify complex ​sustainability regulations.

Why is the EU reviewing the green declaration rules?

The ​European Union has been at the ​forefront of sustainable financing by introducing strict rules to ensure that businesses achieve environmental objectives. However, companies expressed concern that compliance with the EU taxonomy – a system for classifying sustainable ​activities – has become too complex and costly. Therefore, ​the European Union ​is now looking at ways ​to streamline reporting requirements while maintaining environmental integrity.

According ​to the EU Sustainable Financing Platform, the expert group to advise the Commission, its latest report proposes to reduce the number of data companies to be disclosed and introduce more flexible reporting options. This is part of a broader ​initiative by the European Commission to simplify regulation and increase economic competitiveness.

What are ​the proposed amendments?

The ​Expert Group identified a number of ​key measures to ease the reporting burden for businesses, including:

• Reducing the information ​companies must ​provide by introducing estimates and proxies for certain data points.
• Making it easier for businesses to comply with the “Do No Significant Harm” (DNSH) ​criteria, which ensures that green ​investments do not negatively impact other environmental ​objectives.
• Introducing a “comply ​or explain” approach for specific reporting metrics, allowing companies more flexibility in disclosing ​their sustainability efforts.
• Refining how banks and investment firms report their green assets, making ​it simpler to assess their sustainable investment portfolios.

According to ​ESG Today, ​these measures should reduce the reporting burden to non-financial corporations by one third and create a more practical framework for financial institutions.

What impact will ​this have on businesses and investors?

The proposed reforms are expected to have a significant impact on businesses, banks and investors ​across Europe. By reducing compliance costs, businesses can more easily find sustainable financing and meet green investment criteria. In ​particular, financial institutions will benefit from simplified methods of calculating and disseminating their green asset ratios.

However, not all support the proposed ​changes. Civil ​society groups ​and trade unions are concerned that reducing ​reporting requirements may weaken the EU’s sustainable development agenda. As Euronews pointed out, critics argue that reforms could lead to deregulation, which could compromise environmental transparency and accountability.

Is there any concern about green washing?

One ​of the ​main concerns of environmental groups is that flexible ​reporting standards could facilitate business participation ​in “green washing”, the practice of activities ​falsely described as environmentally friendly. Ensuring ​transparency and credibility in sustainability reporting remains a major challenge.

Maria van der Heide, Head ​of EU Policy in ShareAction, warned that simplification efforts could ​lead to “dismantle the European handbook on sustainability standards”. He stressed that the rules developed ​over the years of ​negotiations should not be diluted to meet ​the requirements of small supervisory companies.

And then what?

The European Commission is expected to ​present its first round of regulatory simplifications on 26 ​February 2025 as part of a broader set of “omnibuses” aimed at reducing the ​administrative burden on ​businesses. While the latest proposals focus ​on the EU taxonomy, further ​revisions of ​sustainability standards can be followed.

With the ongoing discussions between ​regulators, ​businesses and civil society groups, the future of sustainable financing in the EU remains uncertain. Policy makers must reconcile the need for ​efficiency and the maintenance of sound environmental standards ​to ensure the ​long-term credibility of the green transition in Europe.