Pushing sustainability aside

Sometimes working in procurement feels like trying to stop a tsunami with a few homemade sandbags and a bucket with a hole in it.

Now is one of those times with the erratically behaving trade war with the United States and the comparably more stable war from Russia on Ukraine. Both placing undeniable pressure on the European Union, leading to a much overdue reflection on Europe's position in the world pecking order, and a slow realization that they have been too lame (yes, lame!) in funding a viable military threat, too busy reaping the peace dividend, and spending too little time on vetting if the EU setup is optimized for supporting business growth inside and outside of the EU.

As with any administration, both private and public, they tend to start off well-intended but will grow into a self-sustainable cell if not kept in check. Its original purpose is being distorted by the internal meanderings of well-meaning but reality-distanced employees, no longer in touch with the environment they are to serve.

The Backdrop: A Challenging Global Landscape
The trade war with the US, marked by tariff threats (some real, some bogus, and a lot with “highly flexible” timelines) and counteractions, has made it clear that the EU must simplify its regulations to safeguard its global standing and also free up resources for both business and security needs. At the same time, Russia’s invasion of Ukraine has intensified economic pressures, from energy shortages to rising refugee numbers, reinforcing the demand for greater resilience across the region. Together, these developments have compelled the EU to tackle the heavy bureaucratic load that has long pulled resources away from innovation and growth.

So on an ugly two-front wartime backdrop, some partial good seems to be brewing. It will never outweigh the effects of a “real” and a “made-up” war by our previous trading partners both from the east and west, but while those are being fought out, the EU and the European business community have to adjust to the new reality.

The Deregulation Push: Balancing Competitiveness and Transparency
The long-overdue EU decision to ease regulations, particularly around sustainability reporting, is a deliberate step to lighten administrative demands and boost competitiveness. European Commission President Ursula von der Leyen has emphasized this goal, stating the intent to “drastically reduce administrative, regulatory, and reporting burdens” so businesses can prosper (European Commission). The Draghi report echoes this view, pinpointing excessive regulation as a major drag on the EU’s economic progress (The Draghi Report).

To put the ever-expanding EU reporting and new legislation flood into perspective, a recent survey revealed that within the narrow “Insurance and Pensions” segment, 6 pages of new legislation has been released daily over the last 5 years for EU companies… Undoubtedly some are valid, but likely not all. But they all have to be managed, implemented, reported on, etc. Taking away focus from building and running strong, competitive businesses.

This change is not risk-free, as less reporting could obscure sustainability efforts, a concern raised by experts who warn of potential gaps in transparency (EU omnibus sustainability proposal: why experts are concerned). However sometimes reality just hits harder than reporting… Considering the implications Europe will face if Russia gains momentum and successfully invades the former USSR countries (never Russia, by the way), we will unfortunately have to focus on survival and prioritize being concerned about the environment again one day when the world is temporarily peaceful again.

We all recognize that sustainability is highly critical to protecting the planet and its warmongering inhabitants for us to have a decent place to live— but first we have to survive; otherwise, it doesn't do us any good.

First Reactions: The Omnibus Directive and Its Implications
The Omnibus Simplification Package, unveiled by the European Commission in February 2025, stands as a cornerstone of the EU’s deregulation efforts. This project brings together and improves rules for sustainability reporting that are set by the EU Taxonomy, the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDDD). It does this by making changes like extending the deadlines for reporting, making the requirements more specific, and focusing on risk-based value chain oversight.

These measures aim to cut administrative burdens by at least 25% for all firms and up to 35% for small and medium-sized enterprises (SMEs), directly strengthening their ability to compete. And we must compete—not for the sake of competing in itself, but to support the overall European economy, whose finances are being attacked from both sides right now.

Making new and less “Eggshell” relationships
In hindsight, Europe’s reliance on gas from a regime led by a former KGB operative—whose claim to fame rests on authoritarian control, full media control and a fondness for self-enrichment —feels perplexing at best and grossly negligent at worst. The Russian leadership’s track record of aggression and economic mismanagement was hardly a secret, yet the EU tethered itself to this unstable partner for years and in very long term deals. Given that many of today’s leaders came of age during the Cold War, a period defined by distrust of Moscow’s ambitions, it’s baffling that those hard-earned lessons didn’t translate into a more cautious energy strategy. What explains this apparent lapse in judgment?

A similar question arises when reflecting on the fragile, “eggshell” dynamic Europe navigated with the United States during Trump’s last term. His administration left little room for ambiguity: Europe needed to bolster its military contributions and take its defense commitments seriously. Yet, the EU’s response leaned heavily on speeches and polished presentations rather than tangible action, resulting in a near-total failure to deliver on promises. With Trump’s unpredictability a well-documented hallmark of his decades-long public profile, it’s surprising that Europe didn’t act sooner to reduce its trade dependency on the US and diversify its partnerships. Now, as American frustration over Europe’s reluctance to fund its security becomes increasingly evident, one wonders why leaders seem caught off guard by a reaction they could have anticipated.

Better late than never, the EU’s shift toward deregulation offers a glimmer of hope—not just for streamlining internal dynamics among member states, but also for fostering easier trade with allies like Canada. With its deep historical ties and closely aligned cultural values, Canada stands as a natural partner. By easing bureaucratic hurdles, the EU can lay the groundwork for trade relationships that are both stronger and more dependable, a welcome shift in an era of global uncertainty.

Why This Matters for our Clients
For our clients and partners at CostBits, these regulatory shifts open a clearer but not yet fully firm path forward. With fewer reporting obligations, businesses can redirect their efforts from compliance to higher-impact areas like procurement optimization, where our tools help not just in reducing cost but also in supporting the urgent shifts from one supplier base in the US to “any other” supplier base that can be trusted even slightly better than the current one.

As our client's supplier landscape evolves, we stand ready to guide our clients, helping them mitigate the immediate supplier risks while keeping sustainability in sight for better times. 

Conclusion
The EU’s push for simplified reporting and some deregulation, spurred by global disruptions, highlights just how vital procurement and prudent supplier risk management have become for businesses today. Though deregulation promises greater efficiency, it also demands a careful approach to maintain transparency and sustainability—goals that are suddenly less driven by EU legal requirements but must be rebalanced based on a more appropriate level, ensuring basic compliance but also shifting focus, funding, and resources internally to where it matters more today and thinking less about tomorrow without making a new mess of our planet!

See also our top 20 free advice for rapidly reducing supplier costs