Customs disputes, the war in Ukraine, environmental concerns: Europe is currently seeking a new direction for its economic strategy. The key question is what role should environmentally sustainable production, agriculture and the protection of natural resources play.
With the Green Deal, the European Union has been aiming to gradually make its industries more efficient and climate-neutral by 2050 since 2019. But the program is under great pressure and is increasingly being undermined. Not least because of the conservative European People's Party (EPP) group in the EU parliament, which has a majority with the support of right-wing extremists.
Decisions are currently being increasingly watered down, the implementation of measures is being postponed or in some cases withdrawn completely.
Goodbye sustainable supply chains!
Two central instruments of the Green Deal are the obligations of companies to report on their environmental footprint and the EU supply chain law. Companies are now obliged to report on their social and environmental footprint. This should ensure comparability and make responsibilities transparent.
Until now, all companies with more than 250 employees had to prepare such reports every year – which applies to around 50.000 companies across the EU. Now, these rules will most likely only apply to large corporations with hundreds of millions of euros in turnover. There will no longer be any reporting obligations for small and medium-sized companies.
Corporations and businesses complain that it creates bureaucracy and ties up too many resources. But critics say: fewer reporting obligations mean less transparency, both for the public and for investors who want to invest in sustainable practices and avoid harmful or ethically problematic business models.
The European Central Bank (ECB) has previously warned that eliminating these reports could create regulatory imbalances. In a letter to the Commission, it stressed that climate change has a "profound impact on price stability" and requires sufficiently reliable data to manage financial risks. According to the ECB, this database would be at risk if the number of companies reporting were reduced to 80 percent, as currently envisaged in the so-called Omnibus package.
Less control over supply chains
Through the adoption of the so-called simplification package, the Supply Chain Law has now also been weakened.
These rules previously covered thousands of large companies from risky industries, such as textiles, fishing or mining, that produce for the EU market.
The plan was to require companies along their entire supply chain to identify, reduce, and stop human rights and environmental abuses. That goal has now been significantly softened.
The rules now only apply to multinational companies with more than 5.000 employees and a turnover of at least 1,5 billion euros. Victims of environmental and human rights violations in the supply chain no longer have the right to sue. Corporations are no longer required to present their own climate strategies, as originally planned.
EU products without additional deforestation? Maybe later!
Products such as tea, coffee, soy and beef were to be sold in the EU only if it could be proven that no forests were destroyed for their production. This was agreed by the 27 EU member states in 2023. The aim was to protect forests, especially in agriculturally intensive regions such as Brazil or Indonesia, and to hold companies accountable.
But that won't happen for now. The new rules have been pushed back to the end of 2026. Also, in the future, far fewer companies will have to prove that their products are produced without deforestation.
For comparison: The UN Food and Agriculture Organization estimates that between 1990 and 2020, around 420 million hectares of forest were lost to deforestation – an area larger than the EU – due to deforestation. EU consumption is responsible for around ten percent of global deforestation, with palm oil and soy accounting for more than two-thirds of that share. Forests store carbon and are crucial for biodiversity.
Weaker environmental standards in agriculture
Around a third of the EU's total budget goes to agriculture - mostly in the form of subsidies. EU rules for more sustainable food production have long been a thorn in the side of big agribusiness.
Politics is also becoming more lax here. In 2023 and 2024, after protests by farmers, stricter rules for the use of pesticides were not adopted. The Nature Protection Act was significantly weakened.
Now the cuts are being made again. In a series of proposals to simplify bureaucracy for farmers and deregulate agriculture, environmental requirements are being reduced in particular. For example, inspections of environmental standards will be limited to a maximum of one per year. At the same time, small farms of up to ten hectares will gain access to subsidies without having to meet certain environmental standards.
Agricultural sustainability strategies will also not have to adapt to new environmental rules in the future. This means that EU farmers will have to do less to protect the environment in the future, even though agriculture has a significant impact on the climate.
End of the ban on combustion engines
It's not official yet, but the EU's decision to no longer produce new cars with internal combustion engines in Europe from 2035 could be history before it even comes into effect.
The German government has also once again spoken out against the end of the sale of petrol and diesel vehicles from 2035. The German car industry has been against the decision from the beginning. Officially, the EU has now decided to "examine" the end of the production of vehicles with internal combustion engines. This means that it is likely that there will be no ban for the next ten years.
In the short term, this could benefit the European auto industry, which still relies on combustion engines. But as the trend in the future shifts towards electric motors, experts see better long-term prospects for automakers that offer suitable models.
Weaker climate targets in the EU
Europe's climate goals are also being further weakened. To prevent even more extreme climate disasters, the EU's Scientific Advisory Board has recommended reducing emissions by 90 to 95 percent by 2040 compared to 1990.
The EU's climate targets, negotiated in the autumn of 2025, have been agreed to by 90 percent. However, there is one problem with this target. Some of the emission reductions achieved in other countries financed by the EU can be counted as Europe's climate contribution.
In other words: the EU does not have to reduce emissions by 90 percent, but only by 85 percent, because it can "buy" up to five percent, for example through afforestation projects abroad. The German government has also been strongly advocating for this.
The target can also be further adjusted if implementation problems arise. At the same time, member states have decided to move the start of CO2 charging in the buildings and transport sectors (ETS 2) from 2027 to 2028.
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