Is the EU taking a page from Trump on deregulation?

BRUSSELS - The European Commission plans sweeping changes to key environmental and corporate responsibility rules, with critics warning that the regulatory rollback will expose workers to abuses and hobble action on climate change.

The plans to loosen rules on corporate sustainability reporting and supply-chain transparency aim to help Europe's companies compete with China and the United States, where President Donald Trump has promised to eliminate 10 regulations for every new regulation issued.

European businesses have long complained that such regulations and bureaucracy make it harder to compete globally.

But rights activists say requiring fewer companies to conduct due diligence to meet environmental, social or governance (ESG) standards will harm efforts to improve conditions for millions of workers.

Greenpeace said European Commission President Ursula von der Leyen was "competing with Musk and Trump to wreck protections for people and planet."

Has the EU made a U-turn on green rules, and what could that mean for workers and the environment?

Which rules are being changed and why?

An omnibus package proposed on Feb. 26 aims to simplify legislation covering companies' responsibility to identify and prevent environmental and social abuses in their supply chains.

Changes to the corporate sustainability reporting directive (CSRD), would exempt around 80% of companies now required to disclose details of their environmental and social impact.

The proposals would also scale down the EU's corporate sustainability and due diligence directive (CSDD) by exempting subcontractors and suppliers further down the supply chain, reducing the number of assessments and delaying the deadline for compliance.

And from 2026, the carbon border levy (CBAM) which imposes a tariff on companies importing carbon emissions-heavy goods, like steel, cement and fertilisers, would no longer apply to 182,000 of the 200,000 importers currently covered.

What are the dangers of deregulation?

Campaigners say the proposals could erase hard-fought green transition and anti-slavery gains.

"Without enforceable accountability, the EU's 'just' transition risks being built on exploited workers, deforestation and accelerated climate change," Matthew Groch, a senior director at environmental group Mighty Earth, said in a statement.

Rights groups say the proposals undermine the fight against forced labour in the supply chain. Anti-Slavery International called on EU lawmakers to reject the "deregulation effort" and "uphold the EU's commitment to ending forced labour".

"Without binding due-diligence obligations, companies will not take responsibility – something the disasters of recent years have made painfully clear," Franziska Humbert, lawyer and policy advisor at Oxfam Germany, said in a statement. She listed failing dams in mining and pesticide poisoning as examples of what goes wrong.

Mary Robinson, the former U.N. High Commissioner for Human Rights, in a statement urged policymakers to vote against "the attempt to eviscerate these sustainability laws."

What are businesses and investors saying?

Investors with 6.6 trillion euros ($6.9 trillion) in assets said the drive to deregulate could create regulatory uncertainty and hamper investments in industries Europe wants to attract.

The changes create "legal uncertainty for investors and businesses," said Aleksandra Palinska, executive director at the European Sustainable Investment Forum (Eurosif), adding that early adopters of sustainability standards would be penalised.

Watering down environmental and human rights rules would limit the ability of investors to "allocate capital for industrial decarbonisation, to conduct forward-looking risk assessments and to support the transition to sustainable growth," she said in emailed comments.

Some businesses and centre-right lawmakers disagree.

"To build a competitive Europe, we must free companies from unnecessary paperwork so they can focus on innovation and growth," said Dolors Montserrat, an EU lawmaker for the European Parliament's centre-right group.

EU member states and the European Parliament could still block the proposals. The bloc is split with France and Germany supporting a reduction in red tape for businesses, while Italy and Spain defend some of the rules.

($1 = 0.9545 euros)

(Reporting by Joanna Gill; Editing by Aya Jean Yackley.)