TAE statement on the EU Environment Act

The EU Green Deal is ultimately an admission by the European Commission that the EU’s legal framework for sustainability has become too complex and burdensome. For years, the Taxpayers’ Association and businesses have been warning that the growing accumulation of Green Deal legislation – from the CSRD through due diligence obligations to the EU taxonomy – carries the risk of creating a regulatory jungle that incurs massive additional costs and undermines Europe’s competitiveness, without making a substantial contribution to the fight against climate change outside Europe.

The Environmental Package is a step in the right direction and contains some technical adjustments, but it does not fundamentally solve the problem. European companies continue to face overlapping reporting obligations, legal uncertainty and rising compliance costs, which are ultimately passed on to taxpayers and consumers.

If Europe truly wishes to strengthen its economy and become a global role model for sustainable policy, it must go beyond superficial simplifications. Only if Europe develops globally marketable solutions will consumers, suppliers and other countries follow this example. What is needed is a genuine reduction in bureaucratic hurdles and a sustainability framework that is economically realistic, proportionate and globally competitive. Otherwise, the EU runs the risk of driving its own economy into stagnation through excessive regulation.

 

Facts about the EU Environment Act
(EU Environment/Sustainability Act)

  1. The Omnibus Act is an amendment to existing Green Deal legislation.

The EU Sustainability Omnibus Act is not a new law, but a package of amendments to existing ESG rules.

Regulations affected:

  • CSRD – Corporate Sustainability Reporting Directive
  • CSDDD – Corporate Sustainability Due Diligence Directive
  • EU Taxonomy Regulation
  • In some cases, also CBAM and sustainable finance rules.

The European Commission’s objective:

  • Simplification of the rules
  • Reducing administrative burdens
  • Strengthening the EU’s competitiveness.
  1. Significantly fewer companies will be required to report.

One of the most significant changes concerns the thresholds for sustainability reporting.

New criteria (CSRD):

  • Companies with more than 1,000 employees
  • and a turnover of €450 million.

This drastically reduces the number of companies affected:

  • Previously expected: approx. 45,000–50,000 companies
  • Under the Omnibus Act: approx. 10,000 companies.

➡️ This corresponds to a reduction of around 80% in the number of companies originally affected.
 

  1. Deferral of reporting obligations

The Omnibus Act also includes a postponement of implementation.

Example:

  • The CSRD reporting obligations have been postponed by two years for many companies.

This so-called ‘stop-the-clock’ directive was already adopted in 2025.

  1. The supply chain rules now apply only to very large groups.

The Corporate Sustainability Due Diligence Directive (CSDDD) has also been watered down.

New thresholds:

  • more than 5,000 employees
  • more than €1.5 billion in turnover.

This means that the directive now applies only to very large multinational companies.
 

  1. The directive was introduced due to competition concerns.

The political background:

Many Member States and companies argued that the ESG regulation:

  • too complex
  • too expensive
  • and a competitive disadvantage compared to the US and China.

That is why the Commission has launched an EU-wide simplification agenda for 2025.
 

  1. Even critics acknowledge that the Green Deal rules remain in force.

The Omnibus Act does not repeal the ESG laws, but rather:

  • reduces the scope
  • extends deadlines
  • simplifies reporting.

The fundamental architecture of

  • CSRD
  • CSDDD
  • EU Taxonomy

remains unchanged.
 

  1. The regulatory costs are considerable

Example from national analyses:

  • The implementation of the CSRD in Germany alone is estimated to incur
    bureaucratic costs of around 1.6 billion euros.

Companies also report

  • Annual compliance costs amount to around €300,000 per company.

 

Brief summary from the TAE’s perspective

These facts underpin three key points and demands of the Taxpayers’ Association:

  1. The EU has effectively introduced a highly complex ESG regulation.
  2. The Omnibus is a political response to bureaucratic and competitive issues.
  3. The reform reduces some rules but does not eliminate the system.

➡️ It is precisely these three points that form the strongest realpolitik framework for criticism from organisations such as the Taxpayers Association of Europe.

 

Update on the EU Environment/Sustainability Omnibus

  1. Status of the Omnibus package (very important)

The key point: the EU Sustainability Omnibus (Omnibus I) is no longer just a proposal, but has been politically adopted.

  • 26 February 2025: The Commission presents a omnibus proposal.
  • 16 December 2025: The European Parliament gives its approval.
  • 24 February 2026: The Council grants final approval.

➡️ This concludes the EU legislative process.
 

  1. What the Omnibus has actually changed

The Omnibus Act is not a new environmental law, but an amendment to the existing Green Deal rules.

Key legislation affected:

  • CSRD – Corporate Sustainability Reporting Directive
  • CSDDD / CS3D – Directive on corporate sustainability due diligence
  • EU Taxonomy Regulation
  • Selected rules on sustainable finance

Objective: Simplification and reduction of reporting obligations.
 

  1. Specific changes (which are politically crucial)

Fewer companies affected

The threshold has been significantly raised.

Example:

  • CSRD reporting requirements apply only to companies with more than 1,000 employees
    → around 80% of the companies originally affected are no longer included.

Deferral of obligations

Some reporting obligations have been deferred.

  • New deadlines in some cases until 2028.

Reduction in reporting obligations

  • Fewer data points
  • Fewer taxonomy reports
  • Less impact on SME supply chains.

The Commission’s policy objective

The Commission has officially announced:

  • 25% reduction in red tape for businesses
  • 35% for SMEs.
     
  1. How the political debate is actually unfolding

The anthology is highly controversial.

Economic and taxpayer-related perspective

Argument:

  • The ESG rules are too complex
  • Costs weaken competitiveness
  • Simplification is necessary

Environmental and NGO perspective

Argument:

  • The Omnibus Directive waters down the Green Deal standards
  • Fewer companies will have to take responsibility

Some critics even describe the decision as a “massive weakening” of the rules.
 

  1. Assessment

The political reality: The Omnibus Act is not a massive reduction in bureaucracy, but rather a regulatory realignment.

Conclusion

Reality

Reality

Reporting obligations

Reduced

Companies within the scope

significantly reduced

Green Deal targets

remain unchanged

Reduction of red tape

in part

The EU is thus attempting to achieve two objectives simultaneously:

1️⃣ Maintain the Green
Deal
2️⃣ Improve competitiveness
 

  1. Concern
  • Although the Omnibus Act reduces certain obligations,
  • the fundamental regulatory framework remains in place.

 Brussels/Munich, 12 March 2026