The European Commission announced the release of its highly-anticipated “Competitiveness Compass” on Wednesday, outlining its new roadmap aimed at boosting Europe’s productivity and global competitiveness, through a wide-ranging series of measures to promote innovation and investment, reduce administrative burdens on companies, and lower energy costs in the EU.

Among the first initiatives to be undertaken under the new roadmap is an “Omnibus” package, set to be proposed next month, which the Compass said will “cover a far-reaching simplification in the fields of sustainable finance reporting, sustainability due diligence and taxonomy.” Key regulations expected to be targeted for simplification include the EU’s Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), and Taxonomy Regulation.

Many of the most significant measures likely to be proposed in the upcoming sustainability reporting-focused Omnibus package will be targeted at smaller businesses, with the new roadmap outlining goals to reduce reporting burdens by at least 25% for all companies, and 35% for SMEs.

Among the most significant initiatives outlined in the roadmap to ease the reporting burden on smaller companies is an upcoming proposal to create a new definition of small mid-cap companies, encompassing thousands of EU businesses and described as “bigger than SMEs but smaller than large companies,” which will be subject to less complex sustainability reporting and due diligence requirements than larger companies, in a similar manner in which SMEs have simpler obligations under the CSRD.

The Compass also includes plans to “address the trickle-down effect” of the regulations, in order to “to prevent smaller companies along the supply chains from being subjected in practice to excessive reporting requests that were never intended by the legislators.”

While the roadmap did not provide detailed recommendations for these regulations, recent proposals submitted to the Commission by France and Germany called for measures including raising the threshold of the CSDDD to cover only companies with more than 5,000 employees (effectively removing roughly 80% of businesses from the CSDDD obligations), delaying implementation of the CSRD requirements for smaller companies, and holding off on sector-specific sustainability reporting requirements.

Another upcoming initiative included in the roadmap is the EU’s Clean Industrial Deal, slated to be proposed in the first quarter of 2025. The plan for the proposal was first introduced by von der Leyen in July 2024, with a goal to help direct investment towards infrastructure and industry, particularly in energy intensive sectors, in order to support the EU’s industrial decarbonization, growth and competitiveness goals. Alongside the Clean Industrial Deal, the new roadmap also outlined plans to introduce in 2025 “tailor-made action plans” for key energy-intensive industries, including steel, metals and chemicals, described as “among the most vulnerable in this phase of the transition.”

Other key planned initiatives under the Competitiveness Compass’ pillar of “a joint roadmap for decarbonisation and competitiveness,” include upcoming proposals for an “Industrial Decarbonisation Accelerator Act” targeting streamlined permitting for renewable energy for emissions-intensive sectors, a “Sustainable Transport Investment Plan” to ramp up chargin infrastructure and production and distribution of renewable and low-carbon transport fuels, a “Circular Economy Act” to support investment in recycling capacity, reduce use of virgin materials in industry and reduce landfilling and incineration, and a review of the Carbon Border Adjustment Mechanism (CBAM).

The roadmap also includes plans for an “industrial action plan for the automotive sector,” noting an anticipated amendment in the EU’s regulation requiring a 100% reduction in CO2 emissions from new cars and vans registered in the EU from 2035, with a new anticipated role for e-fuels.

In a statement released introducing the Competitiveness Compass, EU Commission President Ursula von der Leyen aimed to address concerns that the new initiatives would end up watering down sustainability and decarbonization initiatives from the prior Commission mandate, stating:

“I want to be very clear, the European Union stays the course of the Green Deal objectives, without any question.”

Click here to access the EU’s Competitiveness Compass.