Trump agenda piles pressure on EU to cut red tape

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Big business and national governments are putting pressure on Brussels to cut back on its sustainability agenda amid intense debate about the impact of Donald Trump’s regulatory regime on the EU.

The firms say the latest call for reform of the rules is choking off investment from US oil and gas group ExxonMobil. Europe’s president, Philippe Ducombe, said that “very little” of the $30 billion it had earmarked for investment in technologies such as hydrogen and carbon capture would come to Europe as a result of its “reckless, excessive and costly regulation”.

“A lot of what Europe is doing is trying to do the right thing but doing it in the wrong way,” Ducom told the Financial Times.

The influential European Roundtable for Industry, which counts the bloc’s biggest industrial, consumer and energy companies among its members, was also highly critical in its latest position paper on regulations designed to tackle climate change and improve corporate behavior and investment.

“There are many complex and generally vague definitions and terms, as well as unclear reporting scopes and disclosure requirements,” it said.

President of the European Commission Ursula von der Leyen Business leaders in Davos last week called for a swift easing of the regulatory burden on companies. One European chief executive said Europe was “losing competitiveness every day”. Another said that at this point it was important to change the perception of US financiers who considered Europe to be “unbroken”.

Von der Leyen has simplified sustainability to report as a central goal in his second term as head of the EU executive. But businesses and governments are increasingly concerned that this will not be enough to protect the bloc’s competitiveness, especially given President Trump’s tax and deregulation agenda in the United States.

With pressure on Brussels mounting among national governments, France last week called for a “massive regulatory break” on laws covering everything from chemicals to financial directives.

German Chancellor Olaf Scholz, who faces an election in February, wrote to the European Commission this month to call for a two-year delay in stricter corporate sustainability reporting rules, which came into effect for the largest companies in January this year.

The push marked a stark contrast by EU leaders, who had previously backed a strong climate change plan led by tougher rules to encourage companies to tackle the pollution behind global warming.

In 2022, French President Emmanuel Macron praised sustainability reporting rules as a way to “reform capitalism”.

But a flagging economy and pressure from right-wing parties, as well as challenges from the new US administration, have forced EU policymakers to confront this backlash.

Trump criticized EU legislation as “too complicated” in a video address to the World Economic Forum last week, which has also attacked the bloc over its tax and trade regimes and launched its own regulatory crackdown.

Von der Leyen admitted that “many companies are holding back on investing in Europe because of unnecessary red tape”, in his own remarks delivered in Davos. He promised that the commission would introduce “far-reaching simplification of our sustainable finance and due diligence rules”.

Proposed cuts to corporate reporting rules in three key guidelines – sustainability reporting, supply chain laws covering environmental and human rights abuses and green definitions for investment – ​​in February.

The commission said it would reduce reporting requirements by 25 percent for larger firms and 35 percent for smaller businesses, according to a draft document outlining plans to improve EU competitiveness.

The amendments have already fueled divisions between the Commission and member states and lawmakers, especially, from countries where companies are already preparing for the new reporting rules.

“We need to do something but it’s also about predictability [for businesses]”Another senior EU diplomat Dr.

Experts also worry that pressure from the US will push Brussels too far to backtrack.

Martin Porter, executive chairman of the Cambridge Institute for Sustainable Leadership, said there was a “clear risk” that “a broad simplification agenda unravels policies that businesses have already invested in”.

It also went against the EU’s aim to use stability as a competitive advantage that would help its economy grow further, he added.

Additional reporting by Ben Hall