ECB, Academics Warn EU Over Risks of Easing Corporate Climate Reporting Rules

Regulations & Standards

Written by Onye Dike

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Published May 12th, 2025

2 min read

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The European Union’s plans to relax corporate sustainability rules are drawing criticism from financial and legal experts, with the European Central Bank (ECB) and 31 legal scholars warning the reforms risk undermining climate goals, increasing litigation, and destabilizing markets.

In an opinion published May 8, the ECB criticized the EU Commission’s proposal (the Omnibus Package) to limit mandatory sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD) to firms with over 1,000 employees, slashing coverage by 80%. The ECB urged expanding requirements to mid-sized firms (500–1,000 employees) and enforcing binding audits to ensure data reliability. It also flagged ambiguity in the Corporate Sustainability Due Diligence Directive (CSDDD), stressing companies must implement—not just draft—climate transition plans to avoid greenwashing and systemic risks.

On May 9, legal scholars from Oxford, Amsterdam, and Hamburg echoed these concerns, warning in an open letter that removing the CSDDD’s enforcement clause for transition plans would expose firms to lawsuits. “Mere paperwork, instead of good faith action, would suffice,” they wrote, citing pending cases against energy giants TotalEnergies and Eni. The scholars argued lax rules would spur litigation as plaintiffs target companies failing to align with EU climate targets.

The Commission defended its February proposals, claiming they ease burdens while keeping the EU “on track” for net-zero goals. Corporate lobbies have long pushed for deregulation, citing competition with less-regulated U.S. and Chinese rivals.

Critics, however, warn the changes undermine accountability. Without binding rules, the ECB cautioned, green investment and risk assessments will falter. Analysts say delays could also hinder the ECB’s ability to price climate risks into monetary policy.

As EU lawmakers negotiate the reforms, the clash highlights growing tensions between economic competitiveness and Europe’s climate ambitions—with businesses caught between deregulation demands and escalating legal and financial risks.

Sources: ECB opinion, reuters.com