Navigating the road to EU Competitiveness and what to expect from the Omnibus simplification package

On 29 January, the @European co released its "EU Compass to regain competitiveness and secure sustainable prosperity". The Compass outlines the Commission's priorities and focus areas for the next four years, with a major focus on supporting innovation, reducing bureaucratic burdens, and improving the financing of cleantech, electrification and energy transition, etc.

The election of President Trump and the rise of Chinese dominance in AI and cleantech (including renewable energy-related supply chains)have led to a rethink of what is needed for Europe's security, prosperity, and resilience.

Best explainers and analysis on EU Competitiveness Compass:

• World Economic Forum: What is the EU's Competitiveness Compass and what is it designed to achieve?

• Bruegel - Improving economic policy: Draghi on a shoestring: the European Commission’s Competitiveness Compass

• European Council on Foreign Relations: The EU’s Competitiveness Compass needs funding and ambitious legislation to work

While report states lofty aims and goals, the real challenge will be the implementation phase: from rethinking MFF (multi-annual financial framework) that influences all of the EU funding, to ensuring that national level regulations and policies don't stifle innovation and entrepreneurship.

EU's Omnibus Simplification package

As one of the suggested solutions for reducing administrative and regulatory burden, the Commission announced the creation of the Omnibus Simplification package, re-examining the Corporate Sustainability Reporting Directive 2022/2464 (CSRD), the Corporate Sustainability Due Diligence Directive 2024/1760 (CSDDD/CS3D), and the EU Taxonomy Regulation 2020/852 (Taxonomy Regulation).

The details of what this would entail remain limited, but the greatest worries are about the opening a discussion about level 1 regulation (the main objectives) which would create major uncertainty for business and finance, potentially having the opposite effect desired by the Commission: slowing down of investment in Europe and undoing a lot of progress on data gathering and implementation across member states.

Linda Zeilina-Cross posted last week the preliminary agenda leaked by POLITICO Europe along with the invitee list for the consultations, which caused major concern across the sustainable finance ecosystem. The lack of voices and perspectives from the CEESE region and the absence of businesses and entities supporting the EU Sustainable Finance Framework has caused concern that the outcomes have been decided in advance.

Pascal Canfin posted a critical post on LinkedIn calling for the fixing of the badly conceptualised and planned, even calling it a Fake consultation on the Omnibus.

Best articles on the Omnibus simplification package:

• Investment & Pensions Europe (IPE):The EU omnibus: the start of deregulation in sustainable finance? by Sophie Robinson-Tillett

• Sustainability Magazine: What is EU's Omnibus & Why Are Major Companies Against It

• Forbes: What Is An Omnibus? How The EU Could Reshape Sustainability Reporting

• Herbert Smith Freehills: The EU's Sustainability 'Omnibus': major reform of the EU's sustainable finance system or tinkering at the margins?

News

• On 5 February, the EU Platform on Sustainable Finance will publish its report on "Simplification of the EU Taxonomy to foster sustainable finance". An informative webinar about the report will be held on 14 February at 14:00 CET on Webex - you can register your attendance on the registration site.

• Green Central Banking: Basel Committee committed to climate disclosures, despite US pushback

• The Guardian: ‘Rising star’: EU made more electricity from solar than coal in 2024

• Financial Times: Can sustainable investing survive Trump 2.0?

• The Guardian: Global economy could face 50% loss in GDP between 2070 and 2090 from climate shocks, say actuaries

• Financial Times' Moral Money: European investment in the energy transition is stalling

• ESG Today: Barclays Head of Sustainability Steps Down

• Financial Times: Europe’s banks rethink climate collaboration as alliances struggle ahead of Davos

• Net Zero Investor: Four Canadian banks quit NZBA ahead of Trump’s inauguration

• Bloomberg to fund UN climate agency after US exit from Paris accord

• ESG Today: Texas-Led Multi-State Coalition Threatens BlackRock, Goldman Sachs, JPMorgan and Others with Legal Action Over ESG Commitments

• Financial Times: European investment in the energy transition is stalling

• Financial Times: ESG must learn from the tech bubble — returns matter

Articles and recommended reading

• Reconciling Portfolio Diversification with a Shrinking Carbon Footprint by Patrick Bolton, Marcin Kacperczyk, Henrik Lorin Rasmussen, and Frédéric Samama. The article discusses how investors can construct net-zero-aligned portfolios that reduce carbon emissions over time while maintaining diversification. It presents a methodology for aligning portfolios with IPCC decarbonisation pathways, with a case study on the Danish pension fund PenSam.

• The Democratic Republic of Congo is launching the Kivu-Kinshasa Green Corridor, the world’s largest protected tropical forest reserve, covering 540,000 km² of the Congo Basin. The project aims to balance conservation with economic development, creating 500,000 jobs and promoting sustainable agriculture. Supported by international partners, it seeks to protect biodiversity while boosting local economies.

• Vietnam has approved a project to establish and develop a domestic carbon market, aiming to meet greenhouse gas emission reduction targets and achieve net-zero emissions by 2050.

• The role of Chief Sustainability Officers (CSOs) is evolving, becoming central to business strategy amid challenges like DEI, geopolitics, and regulations. A BSR report highlights how CSOs must balance compliance with innovation to drive sustainability at the highest corporate levels.

• Companies face no penalties for missing climate targets, finds research. A study analysed over 1,000 firms with 2020 climate targets and found that nearly a third (31%) had postponed or abolished their goals, while 9% failed to meet them. Despite these shortcomings, companies faced no significant financial or reputational repercussions, operating in an environment of "limited accountability and low awareness."

 Reports and publications   

• International Sustainable Finance Centre (ISFC) released a report on Sustainable Banking in Central and Eastern Europe. This report explores the current landscape of sustainable banking in the region, shedding light on existing practices and uncovering untapped opportunities.

• Linklaters published its annual ESG Legal Outlook sharing the key global themes of the legal landscape for ESG in the coming year.

• ECFIN: Investment Barriers to Sustainable Finance: How to Enable the Transition in G20 Economies

• The Joint Research Centre of the EC released a report on Delivering the EU Green Deal - Progress towards targets. It assesses progress towards the European Green Deal’s goal of climate neutrality by 2050, analysing 154 targets across key sectors from 2019 to 2024. While significant achievements have been made, the study finds that only 32 targets are on track, 64 require accelerated efforts, 15 show no progress or are regressing, and data is unavailable for 43 targets.

• The EU Platform on Sustainable Finance has published its report on Transition Plans. Key elements for evaluating corporate climate strategies and offers recommendations to enhance policy and access to transition finance. It highlights how the EU’s legal framework can assess alignment with climate targets while addressing greenwashing, emphasizing science-based goals, financial planning, and governance.

Online community insights

• LinkedIn Post: Hortense Bioy shares Six Sustainable Investing Trends to Watch in 2025.

• LinkedIn Post: MSCI Inc. shares how the Omnibus package affects sustainable reporting.

• LinkedIn Post: Andreas Rasche comments on the recently published Europe Sustainable Report 2025.

• LinkedIn Post: Simon Mundy shares his insights on Europe's competitiveness.

• LinkedIn Post: Nadia Humphreys shares the key global taxonomy developments to keep an eye on.

• LinkedIn Post: Marilyn Waite shares an explainer of EU sustainable finance regulation.

• LinkedIn Post: Irene Heemskerk shares insights on delaying the green transition.

• LinkedIn Post: Lisa Sachs comments on a The Wall Street Journal opinion piece "Why Climate-Change Ideology Is Dying".

• LinkedIn Post: Matthias Buck data centres in the EU’s Clean Industrial Deal to boost AI while ensuring sustainable energy use.

Podcasts

• Jason Mitchell and Professor Tom Gosling discuss what the future of net zero commitments could look like.

• TED Tech: ReThinking with Adam Grant: Sam Altman on the future of AI and humanity

• Women in Sustainability Podcast: Episode 5

• Jason Mitchell talks about what the replication crisis represents for sustainable investing; how to think about the incentive problems affecting academic research; and why academic journals and the academic-practitioner community need to be more open to the replication and challenge of existing studies with Professor Andrew King.

Events

February

• 6-7 February 2025 | Florence, Italy: Course on Empirical Methods and Sustainable Finance by EUI

• 10-12 February 2025 | Phoenix USA: GreenBiz 25

• 25-26 February 2024 | London, UK: Sustainable Finance Europe

May

• 15 -16 May 2025 | Vienna, Austria: Environmental agencies of Austria, Germany, Luxembourg, and Switzerland together with the Austrian government and its central bank will host an event focus on Science & Practice for Sustainable Finance: Building bridges for a sustainable transition.

• 19 - 21 May 2025 | Prague, Czechia: CEE Sustainable Finance Summit by International Sustainable Finance Centre (ISFC) will focus on "Navigating the road to Europe's competitiveness" and exploring the best ways to deliver simplification of the EU sustainable finance regulation and its disclosure regime (the Omnibus package)

June

• 21 - 29 June 2025 | London, UK: Climate Action Week London

September

• 21 - 28 September 2025 |New York, USA: Climate Week New York by Climate Group

November

• 20 - 21 October 2025 | Budapest, Hungary: Built Environment European Summit 2025 by RICS