Omnibus impacts on corporate due diligence rules

The buzzword in Brussels is simplification. In reality it’s a euphemism for sweeping deregulation and it marks a dramatic U-turn for the European Union. For decades, the EU prided itself on being a regulatory superpower, capable of extending its influence through protective and demanding regulation. That's now changing. A year ago Mario Draghi, the former president of the European Central Bank, dusted off the timeworn idea of cutting red tape. Draghi's message was eagerly embraced by many EU leaders, many from conservative and far-right parties, and many of them increasingly aligned with Trumpian ideas on blocking migrants, ignoring the environment and canceling overseas aid. Draghi's ideas have since snowballed. In the works are measures to water down laws on everything from technology and chemicals to farming and finance. Executing on those plans, and more, is European Commission president Ursula Von der Leyen. She’s been using the deregulation mantra to deflect criticism from her far-right rivals and to placate US tech giants and Donald Trump and his threats to abandon Europe militarily. To be sure deregulation is having a moment. In Argentina, in India, and in the US where Elon Musk's DOGE dismantled entire agencies, almost certainly illegally, and where Russ Vought at Trump's budget office says wants to put civil servants in trauma. The approach in Europe is far less blunt and belligerent. But there are significant parallels according to Alberto Alemanno, the law professor at HEC Paris and the founder of The Good Lobby. Alberto sees an ideological and methodological alignment across the Atlantic that includes the sidelining of legislators, the privileging of executive fiat, and the possible DOGE-style downsizing of the European Commission. Alberto also warns that von der Leyen is "pushing towards illegality" by bundling together deregulatory measures in so called omnibus laws that bypass the usual channels of evidence-based policymaking and of democratic consent. The European Ombudsman, Teresa Anjinho, has opened an investigation into the omnibus process. But her opinions are non-binding. Meanwhile EU governments are pushing for continuous rollbacks, and von der Leyen has promised to deliver. But there is a deeper unease here, that simplification is not just about deregulation, or pandering to Trump, or the far right, rather that simplification will end up undermining the capacity and legitimacy of EU administration itself. A pair of US academics have described this phenomenon as ungoverning, discrediting institutions and the machinery of government and creating circumstances where enforcement and the rule of law suffer and authoritarians can thrive. Alberto doesn’t see the quite the same deliberate campaign in Europe as in the US. But he warns that von der Leyen’s willingness to take a chainsaw to previously agreed laws — and to act as little more than the executor of member states’ demands — is a kind of dereliction of duty that risks permanently weakening the Union at a moment when many Europeans are looking for answers beyond national borders. As Alberto puts it: the EU is becoming ungoverned — by its own political class.

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