As the EU debates how to strengthen industrial competitiveness, another conversation is quietly but insistently gaining momentum in Brussels. It doesn't have the headline-grabbing appeal of a new industrial fund or a grand competitiveness strategy, but for businesses across Europe, it matters just as much: regulatory simplification.
The Commission's emerging Omnibus simplification package is shaping up to be one of the most closely watched files of the coming months. Omnibus I was approved by the Council of the EU on 24 February 2026 and is now entering the national transposition phase, while Omnibus II is already in preparation for further simplifications. The objective of the package is as ambitious as it is politically delicate: to streamline several major sustainability rules that companies warn have created significant, and in some cases unmanageable, compliance burdens.
At the centre of the discussion are two flagship pieces of legislation that have become synonymous with the EU's sustainability agenda. The Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) were designed to bring transparency and accountability to corporate behaviour, forcing companies to scrutinise their environmental impact and supply chain practices. In principle, few dispute their objectives. In practice, however, businesses across Europe have been sounding the alarm.
The complaints are strikingly consistent. Overlapping reporting requirements, unclear implementation timelines, and a cascade of obligations flowing from larger companies down to their smaller suppliers have created what many describe as a compliance labyrinth. For multinational corporations, the burden is substantial. For smaller firms further down the supply chain, it can be overwhelming. Resources that could fund investment, innovation or expansion are instead diverted to legal teams, consultants and sustainability reporting software. The very competitiveness the EU now seeks to bolster, businesses argue, is being quietly eroded by the weight of its own well-intentioned rules.
The Commission now faces a delicate balancing act. Simplification could ease administrative pressure - particularly for SMEs that lack the resources of their larger counterparts - while maintaining the credibility of Europe's sustainability framework. But reopening or adjusting these flagship laws also raises political sensitivities. Environmental and social standards have become identity markers for the EU, and any perceived rollback will face fierce resistance from the European Parliament and member states where sustainability remains a political priority. The challenge is to cut red tape without cutting ambition.
For European businesses, the coming months will be crucial. The question is no longer whether simplification will happen, but how far Brussels is willing to go in turning regulatory ambition into workable policy. Will the Omnibus package deliver genuine relief, streamlining requirements without undermining the underlying objectives? Or will it produce a series of technical tweaks that leave the fundamental complexity intact?
The stakes extend beyond compliance budgets. At a time when the EU is asking industry to invest billions in the clean transition, to compete with heavily subsidised rivals in the US and China, and to navigate an increasingly uncertain geopolitical landscape, the regulatory environment matters. Complexity is not neutral - it is a drag on dynamism. If Europe wants to accelerate, it must first ensure the weight it places on business is not holding it back.
Ana Sarateanu
Director of Unioncamere Europa