Opinion of the European Economic and Social Committee – A new impetus for the European sustainable finance framework (exploratory opinion requested by the Danish Presidency)
Date: 2025-09-18
Institutions: European Economic and Social Committee
Subjects: climate change policy, corporate governance, corporate social responsibility, disclosure of information, environmental impact, small and medium-sized enterprises, social economy, sustainable development, sustainable finance








C_202600021EN.000101.fmx.xml












Official Journal of the European Union


EN
C series













C/2026/21


16.1.2026






Opinion of the European Economic and Social Committee
A new impetus for the European sustainable finance framework
(exploratory opinion requested by the Danish Presidency)
(C/2026/21)


Rapporteur: 
Javier DOZ ORRIT






Advisors


VAUZELLE Olivier (to the rapporteur)
MOORE Brooke (to Group II)




Referral


Letter from Marie BJERRE, Danish Minister for European Affairs, 7.2.2025




Legal basis


Article 304 of the Treaty on the Functioning of the European Union




Section responsible


Economic and Monetary Union and Economic and Social




Adopted in section


5.9.2025




Adopted at plenary session


18.9.2025




Plenary session No


599




Outcome of vote
(for/against/abstentions)


94/0/3




1.   Conclusions and recommendations









1.1.


With this opinion, the EESC assesses how the EU’s sustainable finance framework can be made more robust and fit for purpose given its importance for the EU’s economic, social and climate objectives. The EESC affirms that simplification should not come at the cost of ambition. While administrative streamlining is needed, the focus should be on how requirements can be implemented more effectively, not on weakening standards. The EU’s regulatory strength and predictability are important competitive advantages that should be preserved amid growing geopolitical and economic uncertainty. This applies to the sustainable finance framework and green legislation more broadly.












1.2.


As climate impacts accelerate, the cost of inaction grows for businesses, workers and the wider economy. Transitioning our economy is not only unavoidable, but a competitive advantage. While some SMEs have welcomed the Omnibus packages, reversal-style policymaking risks compliance confusion, increased costs and delayed investment.












1.3.


The EESC urges EU institutions to ensure that the Omnibus packages support the sustainable finance framework while facilitating company compliance as a positive component. Changes to the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) should not undermine the EU’s ability to scale up sustainable investment and meet the European Climate Law targets. This framework has improved transparency, but this is not enough to drive the necessary systemic shifts. Adapting requirements around transition plans and changing due diligence obligations should not threaten the integrity of the framework. Some of the changes of the Omnibus packages could put it at risk. This could enable unsustainable corporate practices and increase exposure to risks such as carbon lock-in and stranded assets.












1.4.


Some of these changes could also create inconsistencies across the framework, particularly for financial institutions that rely on CSRD and CSDDD disclosures to meet their obligations under the Sustainable Finance Disclosure Regulation (SFDR).












1.5.


Given the upcoming review of the SFDR, the EESC urges the Commission and Parliament to maintain ambition and ensure coherence across the sustainable finance architecture. At the same time, the EESC supports efforts to make reporting requirements more proportionate, particularly for SMEs, through simplified reporting models, targeted guidance and accessible reporting tools that ease compliance without undermining the framework’s objectives.












1.6.


The current moment must be used to renew the EU’s identity as a global leader in social and environmental responsibility. The EESC reiterates its call for a sustainable finance framework that addresses the full environmental, social and governance (ESG) spectrum, and is willing to take its part in the design of minimum social safeguards and to implement a social taxonomy. This framework should be aligned with international standards such as the UN Guiding Principles on Business and Human Rights and OECD guidelines, and grounded in the European Pillar of Social Rights. Social considerations must no longer be relegated to the margins of sustainability definitions.












1.7.


The EESC highlights the need for a framework that properly accounts for the full spectrum of risk associated with unsustainable activities. This includes recognising the social costs of such actions. Within this context of strengthening ESG, the EESC advocates addressing the risks of biodiversity loss and ecosystem degradation through the necessary investments.












1.8.


The EESC calls for clearer definitions of key sustainability concepts. This includes through the formal recognition of transition finance as a distinct part of the EU’s sustainable finance agenda. The EESC supports the creation of a dedicated transition category within the EU’s classification system, including mandatory transition plans with reporting requirements that demonstrate credible progress toward those plans, with the aim of phasing out financing of harmful activities.












1.9.


The EESC calls for the new legislative framework for sustainable finance to make it easier for SMEs and social economy enterprises to meet their requirements, while also being an instrument for these two economic macro-sectors to make a fair transition to the green economy.












1.10.


The EU’s long-term economic competitiveness depends on its ability to mobilise savings and investments toward meeting the goals of the green and digital transitions and closing the innovation gap in the most advanced technologies. The EESC demands that the Savings and Investment Union (SIU) – the new version of Capital Markets Union – and the Banking Union be implemented without further unjustifiable delays. The EESC believes that collective savings instruments, such as occupational pension plans, must be strengthened as a solid source of sustainable investment.












1.11.


The EESC calls on the EU and Member States to reaffirm their financial and political commitment to the sustainability agenda. Adequate fiscal space must be preserved for green and social investment. Reducing the impacts of climate change and adapting to the unavoidable damage it will cause is not optional, but essential for economic resilience, social stability and long-term competitiveness. The EU has a clear opportunity to lead by example in building a competitive economy that is sustainable and just. To achieve this, it must resist pressures to lower ambition and instead reinforce an architecture that enables responsible finance and shared prosperity…




2.   Introduction









2.1.


The EU is facing growing geopolitical instability, which is threatening security and defence, disrupting trade and supply chains, weakening climate commitments and undermining both international law and multilateral institutions. Many large companies withdrew from the Net Zero Asset Managers Initiative even before the Trump administration took office. It is time to strengthen and renew the EU’s founding principles, as well as its socioeconomic and cultural identity. There is a risk that the just green transition objectives could be undermined by both a lack of funding and a weakening of regulatory frameworks. Assessing the latter for sustainable finance at EU level is the subject of this opinion, together with recommendations on maintaining regulatory strength through the simplification of rules without calling them into question. Do the legislative proposals OMNIBUS I and II fulfil this condition (1)?




3.   Background and context









3.1.


Europe is the fastest-warming continent and faces critical climate risks across ecosystems, health, infrastructure, food and finance (2). With the EU’s adaptation gap estimated up to EUR 28 billion annually by 2030 (3) and global mitigation needs up to USD 11.7 trillion by 2035 (4), addressing these risks and meeting the EU’s 2030 and 2040 climate targets will require a sharp increase in investment.












3.2.


Investing in climate action is a matter of maintaining competitiveness and economic resilience. The proposed Clean Industrial Deal (CID) is an acknowledgement of this, calling for an additional EUR 480 billion per year to drive industrial transformation and scale up net-zero technologies. The newly introduced concept of a Savings and Investments Union (SIU) complements the CID and the broader investment push, aiming to deepen EU capital markets and reduce fragmentation. Delivering on this ambition will require a sustainable finance framework that is coherent, credible and fit for purpose.












3.3.


Sustainability refers to meeting present needs without compromising the ability of future generations to meet theirs, and encompasses environmental, social and economic dimensions. This vision underpins the UN Sustainable Development Goals, which the EU reaffirmed in its 2017 conclusions on ‘A sustainable European future: The EU response to the 2030 Agenda for Sustainable Development’. Sustainable finance involves directing capital toward activities that integrate environmental, social and governance (ESG) factors in investment decisions (5).












3.4.


The EU launched its Action Plan on Sustainable Finance in 2018 to establish a framework for redirecting capital flows toward sustainable economic activities. This initiative laid the foundation for core legislative instruments that now underpin the EU’s sustainable finance framework. The Sustainable Finance Disclosure Regulation (SFDR), in force since 2021, requires financial market participants to disclose how they integrate ESG risks and the sustainability characteristics of their products. Since its implementation, it has improved the quality and quantity of the sustainability information available to investors, increased sustainable financial products offering, enhanced transparency, reduced greenwashing risks (particularly for Article 9 funds) and reduced ESG risk in the funds market (6) (7).












3.5.


The SFDR is complemented by the EU Taxonomy for sustainable activities, which provides a classification system defining environmentally sustainable economic activities, the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS). The CSRD sets out who must report and what to disclose on, while the ESRS specifies how, standardising disclosures.












3.6.


The Corporate Sustainability Due Diligence Directive (CSDDD) obliges companies to address sustainability risks across value chains, while the Anti-Money Laundering Package safeguards financial flows. This set of initiatives is a key component of the European Green Deal, recognising public funding alone is insufficient. At the same time, it has contributed to more regulatory certainty for investors, which should be one of the EU’s comparative strengths.












3.7.


Despite its ambition, the current sustainable finance framework has faced a range of persistent challenges:






—


businesses, particularly SMEs, view the framework as complex and administratively demanding – a sentiment echoed in Mario Draghi’s report The future of European competitiveness
                         (8). These criticisms are compounded by regulatory delays and revisions, which have contributed to a fragmented and non-streamlined landscape;










—


there are widespread concerns over greenwashing, driven in part by a lack of clear definitions of key terms such as ‘sustainable investment’ under the SFDR, and the use of Article 8 and 9 categories as informal marketing labels, though not designed as such;










—


sustainability characteristics are the main focus, with insufficient attention paid to potential adverse impacts, portraying an incomplete picture;










—


transition finance lacks integration, with no mechanism to distinguish between activities that are already sustainable and those progressing toward it;










—


despite the objectives of the European Pillar of Social Rights, the taxonomy does not include social indicators as requested by the European Supervisory Authorities (9). The EESC in its own-initiative opinion on a Social taxonomy – Challenges and opportunities
                         (10) called for an operationally viable and conceptually sound social taxonomy. As a result, the SFDR is currently under revision, with an updated framework expected later in 2025.
















3.8.


In response to calls for simplification, the Commission introduced the Omnibus simplification packages 1 and 2 in February 2025. Omnibus 1 focuses on delaying and easing reporting and due diligence requirements through proposed amendments to the CSRD, CSDDD, EU Taxonomy and Carbon Border Adjustment Mechanism. Omnibus 2 focuses on improving the capacity, efficiency and simplicity of InvestEU.












3.9.


As stated in the EESC opinion on the First Omnibus package on sustainability (11), the Omnibus packages represent, on the one hand, a step toward reducing bureaucracy and enabling businesses to comply effectively with realistic and proportionate legal requirements. However, they also raise two types of problem: some of their provisions put at risk the current sustainable finance framework and do not resolve the problem of the lack of assistance from the Commission and Member States that businesses are calling for. The objective of this initiative should go beyond merely helping businesses meet their obligations; it should also strengthen their role in advancing the EU’s broader sustainability goals, while upholding the highest standards in environmental protection, social responsibility and human rights.




4.   EESC assessment of the legislative background and the political and geopolitical framework in relation to the sustainable finance framework









4.1.


The Omnibus packages acknowledge the complexity of the sustainable finance framework and aim to ease reporting and improve usability. Moreover, they ease transition finance by introducing ‘partial’ Taxonomy alignment. However, the packages risk weakening environmental and social standards, and the EU’s push for sustainable investment under the CID. Omnibus 1 proposes removing transition plan requirements and exempting ~80% of companies from CSRD reporting. This would weaken the data availability and comparability necessary for SFDR disclosures, likely reducing investor confidence and slowing sustainable finance growth. The CSDDD is particularly impacted by the proposals. The proposed changes could greatly weaken the integrity of the sustainable finance framework specifically with due diligence narrowed to only tier 1 suppliers, and with the civil liability and 5 % minimum penalties removed. As a whole, the packages threaten regulatory stability, one of the EU’s competitive strengths.












4.2.


Across the sustainable finance framework, inconsistent definitions remain a core challenge. The SFDR is broad, leading to discrepancies and risks of greenwashing. The EU Taxonomy offers a more specific, science-based approach for environmental objectives but keeps social factors underdeveloped. Article 26 of the Taxonomy Regulation called for a review of its expansion, and, while the Platform on Sustainable Finance published its Final Report on a Social Taxonomy in 2022 (12), progress has stalled. The Omnibus simplification packages could further complicate this by changing reporting and due diligence requirements under the CSRD and CSDDD, thus enabling a reform of the taxonomy.












4.3.


A clear understanding of sustainability also requires clarity on what it is not. The current approach of ‘sustainable’ versus ‘not sustainable’ misses the full financing needs spectrum and risks greenwashing, particularly for transition finance. The 2023 Commission recommendation on transition finance suggests it be recognised under sustainable investment rather than distinct from it. However, transitioning towards sustainability is not the same as being sustainable today, making it essential to distinguish between the two. Capital expenditure disclosures under the Taxonomy illustrate transition paths, but challenges remain, including cases where green CapEx does not yield green revenue or reinforces carbon lock-in. This makes ensuring the creation of transition plans all the more important for safeguarding the integrity of sustainable finance.












4.4.


SMEs are central to the European economy, yet the current framework remains poorly adapted to their realities. Many SMEs operate with low capital needs and modest returns, exposing them to a real challenge vis-à-vis market-based finance tools targeting high-growth, high-profit projects. The exclusion of regional green labels, the lack of recognition for job creation, and the dominance of financial profitability metrics together expose a structural gap.












4.5.


Simplification efforts also reflect a global political landscape that is pressuring the EU to maintain competitiveness. The EU is engaged in a global race with major powers like the United States and China in clean technologies, critical raw materials and industrial innovation. On the one hand, this means ensuring that EU firms are not undercut or offshored, and that Europe is an attractive destination for both business and investment. On the other hand, it is about securing supply chains and building strategic partnerships, such as the Clean Trade Investment Partnerships (CTIPs) outlined in the CID. Both objectives require a sustainable finance framework capable of mobilising capital efficiently and at scale.












4.6.


These tasks are complicated by geo-economic instability and fragmented trade ties. This landscape risks capital flow volatility, distorted capital allocation, inflation and reduced investor confidence. Moreover, recent pressure from the US government on EU firms to align with its stance on anti-discrimination practices raises concerns about the resilience and trajectory of the social side of the EU’s sustainable finance framework (13).












4.7.


Mobilising public funding will be essential to attract private capital at the scale required for the green transition. While the fiscal framework has made room for sustainability, its long-term ability to do so remains uncertain as defence rises to the top of the budgetary agenda. This challenges both attracting private capital, given the need for sufficient public funding as a signal and enabler, but also for securing public funding in areas with more complex risk-return dynamics, such as biodiversity.












4.8.


Biodiversity and nature are crucial to Europe’s long-term competitiveness and resilience. As noted by the World Economic Forum, over half of global GDP depends on nature and its services, while biodiversity loss is among the top global risks over the next decade (14). Despite this, nature-related issues remain underemphasised in the current political and finance agendas. This neglect threatens the EU’s environmental, social and economic resilience, and its capacity to withstand future shocks.




5.   General comments









5.1.


In the current geopolitical context of instability and weakened sustainability commitments from the USA, the EESC believes EU leadership is more necessary than ever. The EU must lead by example, maintaining ambitious yet necessary goals within a clear, transparent and healthy framework for the economy and its citizens.












5.2.


Sustainable finance has grown in recent years and is now prominent in Europe (15). It has proven to be a guarantee of good long-term profitability, with greater control of extra-financial risks. Market players have invested heavily in its development, and companies have made significant efforts to meet sustainability criteria. Along the way, certain inefficiencies or areas for improvement have been identified, such as the lack of clarity and simple criteria for investors, and the complexity of reporting for companies and asset managers.












5.3.


The EESC believes that the EU needs a renewed general framework for sustainable finance. This includes a reform of the Taxonomy. Additionally, simplification and harmonisation should be pursued along the lines proposed in this opinion so basic requirements are not eliminated, as proposed in some sections of the Omnibus packages.












5.4.


The EESC believes that the necessary simplification must not come at the cost of the ambition of meeting the 2050 climate targets and that the Omnibus packages should not scale back this ambition. Any simplification efforts should be based on evidence-based assessments of administrative burden, rather than numerical objectives – 25 % – set without technical justification. A stop-start approach to policies under the European Green Deal risks weakening investor confidence. Regulatory stability is one of the EU’s greatest assets, particularly compared to less predictable global competitors, and is vital for attracting capital. This means refining the framework, not reversing its course. This extends beyond the sustainable finance framework to the broader European Green Deal agenda, as investor confidence relies on a consistent policy ecosystem.












5.5.


The Omnibus packages may also create hurdles to compliance with the SFDR. With the revision of this Regulation scheduled for the end of 2025, it would be necessary to ensure that its ambition is maintained and that the overall objectives of the 2050 climate targets are not reduced. Attention should instead be placed on the ESRS, exploring the merits of tactics like sector-specific guidance and topic prioritisation for eased reporting.












5.6.


The three pillars of sustainability are the ESG factors: environmental, social and governance. The EESC understands and is willing to take its part in the design of minimum social safeguards and to implement a social taxonomy taking into account criteria from international organisations, such as the United Nations Guiding Principles on Business and Human Rights (16), the OECD guidelines (17), or the European Sustainability Reporting Standards (18), to recognise key aspects such as freedom of association and collective bargaining. The EESC also stresses the need to ensure the taxonomy’s integrity by reviewing existing inclusions that may be inconsistent with the EU’s shift away from fossil fuels.












5.7.


The EESC recommends rebalancing the framework to better serve the real economy by supporting SMEs, enabling them to access affordable finance and facilitating the administrative tasks that enable them to comply with and commit to sustainability. Technical support, simpler criteria and less bureaucracy should be considered in order to achieve this goal without foregoing ambition.












5.8.


Biodiversity and nature are critical to the EU’s resilience. Nature-positive finance must be a core part of the EU’s sustainable finance strategy, aligned with the Kunming-Montreal Global Biodiversity Framework and properly integrated into the upcoming revisions of the Common Agricultural Policy and the Multiannual Financial Framework. Clear safeguards must be outlined to prevent control being shifted to profit-driven actors with little regard for long-term sustainability. At the same time, EU environmental regulations must be more ambitious to prevent biodiversity loss while helping guide private capital toward nature-positive activities.












5.9.


The EESC welcomes greater foresight through properly embedded and priced climate-related risks within financial markets. This includes, but is not limited to, risks linked to biodiversity loss, adaptation gaps, transition risks, climate litigation and broader environmental liabilities. Embedding these risks disincentivises activities at odds with the EU’s climate targets. Such alignment is essential for intergenerational fairness, safeguarding both future prosperity and environmental stability. It is also important for companies to promote a balance between profitability, sustainability and employment.




6.   Specific comments









6.1.


The proposed simplifications in the Omnibus packages 1 and 2 may improve compliance levels. However, significantly reducing the number of companies subject to reporting, delaying compliance deadlines and lowering reporting and due diligence requirements could hinder sustainability goals. Sustainability and competitiveness should not be at odds with each other. The EESC agrees with the simplification of administrative burdens, but this should not lead to sustainability goals being reduced or delayed. A revised approach should retain obligations (for example for large companies with 500-1000 employees or listed SMEs) but make them more proportionate, using simplified reporting models (e.g. the voluntary SME standard), with appropriate support from public authorities and post-compliance checks. The EESC agrees with simplifying and streamlining procedures, while harmonising with other directives, but calls for deleting articles that reduce objectives, prevent the participation of the social partners, and remove the requirements of CSDDD. The directives concerned only recently came into force, and changes are therefore not based on an evaluation of their effectiveness.












6.2.


The EESC acknowledges the importance of transition plans to ensure the integrity of its financing, avoiding carbon lock-in, stranded assets and greenwashing, etc. Transparency is insufficient to realise the green transition. Disclosure requirements must be matched with obligatory targets and company action to meet transition goals. Transition plans under the CSDDD should remain mandatory and not be diluted by Omnibus revisions.












6.3.


The sustainable finance framework, and the SFDR specifically, must create space for transition finance while clearly distinguishing it from sustainable activities. The EU Platform on Sustainable Finance has proposed a new product categorisation system including a distinct category for transition finance (19). The EESC calls for any revision of current categories to include a distinct classification for transition finance.












6.4.


The EESC supports strengthening feasibility assessments. These should move beyond short-term cost considerations and be based on a long-term view that includes transition risks, future costs and environmental impacts. The regulatory framework should ensure sustainable finance assets do not exclude SMEs from supply chains, simplify processes, and channel investments to segments of the economy that can have a positive impact at regional level.












6.5.


The European entrepreneurial fabric stands out from others because of the social economy. At present, the sector: has 4.3 million companies, employs 11.5 million people and generates €912 billion in added value. It operates in all key sectors, from agri-food and construction to education and financial services. In 2021, the European Commission recognised the social economy as one of the EU’s 14 industrial ecosystems and, with the Social Economy Action Plan, underlined the importance of promoting it to strengthen Europe, proposing concrete actions for its development. The EESC believes that the new regulatory framework for sustainable finance must facilitate social economy companies’ full entry into the green economy.












6.6.


It is necessary to analyse the exercise of voting rights in companies by shareholders, and the possibility of engagement when the investment is made through investment funds or pension funds. More transparency and participation are needed in the exercise of voting rights as well as in the voting recommendations they may receive from specialised companies (proxy advisers). In the case of employment pension funds, the participation of worker and company representatives should allow for the more agile exercise of voting rights by amending the CSRD.












6.7.


A favourable framework for collective savings instruments such as occupational pension plans is needed, with advantageous conditions for stakeholders in terms of cost. The effective participation of workers and companies should be encouraged, which would facilitate the implementation of pension schemes and bring benefits to these stakeholders. It would make it possible to channel retirement savings to invest in and finance the European economy within a controlled framework of sustainable finance.












6.8.


The reform of the EU’s sustainable finance framework must also seek greater interoperability with global standards.






Brussels, 18 September 2025.


The President


of the European Economic and Social Committee

Oliver RÖPKE
               





(1)  On 26 February 2025, the European Commission adopted a simplification package. It covers a number of legislative areas, including sustainable finance rules, carbon border adjustment mechanism and investment with the aim of simplifying EU rules, enhancing competitiveness and attracting investment.

(2)  
            European Climate Risk Assessment, European Environment Agency, 2024.

(3)  
            Adaptation Investment Cycle, PATHWAYS2RESILIENCE.

(4)  
            Emissions Gap Report 2024, UNEP, 2024.

(5)  
            A Blueprint for Responsible Investment, UNPRI, 2017.

(6)  
            Platform Briefing on EC targeted consultation regarding SFDR Implementation, Platform on Sustainable Finance, 2023.

(7)  
            The current implementation of the sustainable financial disclosure regulation (SFDR), European Parliament, 2024.

(8)  
            Mario Draghi, The future of European competitiveness: In-depth analysis and recommendations, p. 318.

(9)  
            Joint ESAs Opinion on the assessment of the Sustainable Finance Disclosure Regulation (SFDR), 2024.

(10)  
            
OJ C 486, 21.12.2022, p. 15.

(11)  
            OJ C, C/2025/4212, 20.8.2025, ELI: http://data.europa.eu/eli/C/2025/4212/oj.

(12)  
            Final Report on Social Taxonomy, Platform on Sustainable Finance, 2022.

(13)  
            Trump pressuring European companies to follow anti-DEI path, Federica Di Sario, 26 March 2025.

(14)  
            Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy, World Economic Forum, 2020.

(15)  
            Funds and the State of European Sustainable Finance.

(16)  
            https://www.ohchr.org/documents/publications/guidingprinciplesbusinesshr_en.pdf.

(17)  
            https://mneguidelines.oecd.org/.

(18)  
            https://finance.ec.europa.eu/regulation-and-supervision/financial-services-legislation/implementing-and-delegated-acts/corporate-sustainability-reporting-directive_en.

(19)  
            Categorisation of products under the SFDR: Proposal of the Platform on Sustainable Finance, 2024.


ELI: http://data.europa.eu/eli/C/2026/21/oj
ISSN 1977-091X (electronic edition)