The European Ombudsman has opened a formal inquiry into the European Commission’s decision to relax corporate sustainability regulations without conducting a public consultation—raising critical concerns over transparency and governance in the EU’s legislative process. The investigation comes amid growing scrutiny of the Commission’s February 2025 “simplification omnibus” proposal, which aims to reduce ESG reporting and carbon neutral strategy obligations for businesses. 

The proposal seeks to exempt thousands of SMEs from sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD) and scale back due diligence responsibilities outlined in the Corporate Sustainability Due Diligence Directive (CSDDD). Civil society groups—including ClientEarth, Global Witness, and Friends of the Earth—filed a complaint, claiming the Commission violated its Better Regulation Guidelines by bypassing public input and consulting only with industry lobbyists behind closed doors. 

Ombudswoman Teresa Anjinho confirmed that the inquiry will explore why no public consultation or formal impact assessment was carried out, and which private-sector actors were engaged in shaping the draft legislation. “This investigation is crucial to ensure EU lawmaking remains inclusive, transparent, and accountable,” she stated. 

The Commission has defended the proposal as a response to industry concerns over regulatory burdens that could impact Europe’s global competitiveness, especially compared to countries like China and the U.S., where ESG regulations are being scaled back. 

The watchdog’s findings could reshape the trajectory of EU ESG policy, potentially stalling or amending regulatory rollbacks. This probe underscores a broader debate over the balance between economic efficiency and sustainability commitments, with significant implications for the EU’s carbon neutral strategy and its credibility as a global leader in responsible corporate governance. 

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https://esgnews.com/eu-watchdog-probes-commission-over-bypassing-consultation-on-eased-sustainability-rules/