The EU Green Deal explained: what it means for businesses

The European Green Deal is one of the most far-reaching pieces of climate and environmental policy in the world, and its influence reaches well beyond the European Union's borders. It spans energy, transport, industry, farming, biodiversity, pollution and the circular economy. Its effects also reach well beyond Europe: a manufacturer in Ontario, a law firm in Bristol or a software company in Texas can all feel them through the customers they supply, the goods they ship into Europe, or the data their partners start to ask for.

Over the past year the Green Deal has also changed shape. A wave of simplification, known collectively as the Omnibus, has narrowed who has to do what, while leaving the underlying direction of travel intact. This article explains what the Green Deal is, how it has developed since 2019, how its main business-facing rules fit together, and where accurate carbon data comes into the picture.

What is the EU Green Deal?

The European Green Deal is the EU's overarching strategy for reaching climate neutrality by 2050. Approved in 2020, it is not a single law but a package of policy initiatives designed to make Europe the first climate-neutral continent, with no net greenhouse gas emissions by the middle of the century.

The strategy works by reviewing existing legislation against climate goals and introducing new rules across areas including energy, transport, industry, farming, biodiversity and the circular economy. In 2021 the EU put the headline ambition into law through the European Climate Law (Regulation (EU) 2021/1119), which made the 2050 neutrality goal legally binding and set an intermediate target of cutting net emissions by at least 55% by 2030, compared with 1990 levels.

For businesses, the important point is that the Green Deal is an umbrella. The specific obligations that affect day-to-day operations sit in the individual laws beneath it, such as the Carbon Border Adjustment Mechanism and the Corporate Sustainability Reporting Directive. Understanding the umbrella helps make sense of how those individual rules connect.

How has the EU Green Deal evolved since 2019?

The Green Deal was first presented in December 2019. The European Council agreed to press ahead with it that month, and the European Parliament voted to support it in January 2020. From there it moved quickly from ambition to legislation.

A few milestones stand out:

• 2020: The European Green Deal is launched as the EU's growth and climate strategy.
• 2021: The European Climate Law makes 2050 climate neutrality and the 2030 target of at least 55% emissions reduction legally binding.
• July 2021: The Commission adopts the "Fit for 55" package, a set of proposals to align EU climate, energy, transport and taxation rules with the 2030 target. This package includes the move to require all new cars sold in the EU to be zero-emission from 2035.
• February 2024: The Commission recommends an intermediate target of a 90% net emissions cut by 2040, confirming the longer-term direction.

The more recent shift has been towards simplification and competitiveness. Following reports by Enrico Letta and Mario Draghi on Europe's economic position, and the Budapest declaration of November 2024 calling for a reduction in administrative and reporting burdens, the Commission proposed the Omnibus I package in February 2025. Rather than reversing the Green Deal, the Omnibus reduces the number of companies caught by its reporting and due diligence rules and streamlines what remains. The goals stayed the same, but the compliance net was drawn in tighter around the largest organisations.

What are the key policies within the EU Green Deal?

The Green Deal contains dozens of measures. Some affect how products are designed and how waste is handled, such as rules to make batteries more durable and user-replaceable, to design products for repair rather than disposal, and to stop the destruction of unsold consumer goods like textiles and footwear. Others, like the Zero Pollution Action Plan, tighten standards on air, water and industrial emissions. Funds such as the Just Transition Fund and Social Climate Fund support workers and households through the changes.

When it comes to carbon and supply chains specifically, which is where most businesses encounter the Green Deal in practice, three rules stand out:

• The Carbon Border Adjustment Mechanism (CBAM): a carbon price on imports of certain carbon-intensive goods entering the EU.
• The Corporate Sustainability Reporting Directive (CSRD): rules requiring large companies to report publicly on environmental, social and governance matters. The detailed disclosure requirements sit in a set of standards called the European Sustainability Reporting Standards (ESRS).
• The Corporate Sustainability Due Diligence Directive (CSDDD): rules requiring the very largest companies to identify and address human rights and environmental harms across their operations and value chains.

Alongside these sit other Green Deal elements such as the EU Taxonomy, which classifies environmentally aligned economic activities, and the EU Emissions Trading System, which puts a price on emissions from energy and heavy industry. For most businesses, though, CBAM, the CSRD and the CSDDD are where the practical questions arise.

How do CBAM, the CSRD and the CSDDD compare?

These three rules are often grouped together, but they do different things, apply to different organisations, and sit at different stages of implementation. The table below sets them side by side, reflecting the position after the Omnibus changes.

A useful way to read this table: CBAM is about goods crossing the border, the CSRD is about what a company reports, and the CSDDD is about how a company behaves across its value chain.

What is the EU Omnibus and what did it change?

The Omnibus is not a new climate rule. It is a package of amendments that simplifies several existing Green Deal laws at once. It arrived in two stages.

First, the "Stop-the-Clock" directive (Directive (EU) 2025/794), published in April 2025, postponed certain CSRD reporting timelines by two years and pushed back the first phase of the CSDDD by a year, giving companies and legislators breathing room.

Second, the substantive changes came through Directive (EU) 2026/470, adopted on 24 February 2026 and in force from 18 March 2026. Its main effects were to:

• Raise the CSRD threshold so mandatory reporting applies only to companies with more than 1,000 employees and over €450 million net turnover, and end the previous phased "wave" system.
• Raise the CSDDD threshold to companies with more than 5,000 employees and over €1.5 billion net turnover, and remove the requirement to adopt a climate transition plan.
• Introduce a value chain cap, so that companies with 1,000 employees or fewer can decline information requests from larger reporting partners that go beyond a defined voluntary standard.

The Omnibus also commits the Commission to simplifying the ESRS. The revised standards reduce mandatory data points by more than 60%. The Commission published the draft in May 2026, the consultation closed on 3 June, and adoption is expected later in 2026, with the simplified standards applying from financial year 2027. A separate simplification of CBAM (Regulation (EU) 2025/2083) introduced the 50-tonne exemption, which removes an estimated 182,000 mostly smaller importers from CBAM obligations while still covering more than 99% of the emissions in scope.

The combined effect is significant: far fewer companies are directly bound by the CSRD and the CSDDD than under the original rules. For mid-market businesses in particular, this changes the nature of the obligation from direct to indirect.

Which businesses and sectors does the EU Green Deal affect?

Because the Green Deal is a collection of rules rather than one, its impact varies by sector and by how a business trades. The table below gives a practical sense of where the main touchpoints tend to fall.

For SME and mid-market businesses specifically, the most common point of contact is not a direct legal obligation. It is a request. A larger customer that reports under the CSRD, or imports CBAM goods, may ask its suppliers for information. The value chain cap means a smaller supplier cannot be pushed to provide more than a defined voluntary standard requires, but the request itself is becoming a routine part of doing business with EU-facing companies.

What does the EU Green Deal mean for businesses outside the EU?

A business based in the UK, US or Canada is not directly bound by EU directives. The Green Deal still reaches it in three practical ways.

• Trade in goods. A non-EU company exporting CBAM-covered goods to the EU may be asked by its EU customers for embedded emissions data, because the EU importer carries the CBAM obligation and needs that information to comply.
• Significant EU activity. A non-EU company with large EU operations or turnover can fall within the scope of the CSRD or the CSDDD if it meets the thresholds, though after the Omnibus this applies only to the largest groups.
• Being in someone's value chain. Supplying a large EU company that reports or conducts due diligence can lead to emissions data requests, regardless of where the supplier is based.

The pattern is consistent. Even where the law does not apply directly, the expectation to produce credible carbon data travels down the supply chain. Many countries are also developing their own disclosure rules in parallel, so businesses preparing for the Green Deal's indirect effects are often laying groundwork they will need at home too.

Why is carbon data so important for businesses under the EU Green Deal? 

The Green Deal spans a wide range of environmental goals, from cleaner air and water to biodiversity, waste reduction and the clean energy transition. However, carbon reporting is a common thread that links many parts of the Green Deal. CBAM runs on embedded emissions figures. The CSRD's climate reporting requires emissions disclosures. And the supplier requests that flow down from larger companies usually centre on a business's footprint. So while the Green Deal reaches far beyond carbon, a credible measurement of greenhouse gas emissions is frequently the first piece of information a business is asked to produce.

That point matters most for smaller companies. Most SME and mid-market businesses will not report under the CSRD or carry out due diligence under the CSDDD, so the direct obligations rarely apply to them. Where they are far more likely to feel the Green Deal is indirectly, through their supply chain: a larger customer that does report, or that imports CBAM goods, will often ask its suppliers for emissions data to complete its own picture. A business that can measure its footprint accurately is therefore better placed to respond to those requests when they arrive, and to meet the wider environmental expectations its customers and markets are increasingly setting.

How Seedling can help

At Seedling, we help mid-market businesses measure a full-scope carbon footprint across Scopes 1, 2 and 3, aligned to the GHG Protocol, and supported one-to-one by a carbon expert. Accurate measurement is the foundation for the carbon-related questions the Green Deal tends to surface, but it is the start of the work, not the whole of it.

If a larger EU customer asks you for emissions data as part of a supplier assessment, you can respond with a credible, assured figure rather than a rough estimate. Our supplier engagement tool also works the other way, helping you collect emissions data from your own suppliers and pull it straight into your footprint, which matters as value chain requests become more common.

From there, we help you turn that data into action: identifying your emissions hotspots, setting a science-based reduction target, building a plan to decarbonise, and producing the reports you need to share with customers, investors and procurement teams. So whether the prompt is a customer request, a CBAM-related question, or your own progress towards Net Zero, you have accurate carbon data and the expert support to do something useful with it.

FAQs

Is the EU Green Deal a single law?‍

No. It is an overarching strategy made up of many separate laws and initiatives, including the European Climate Law, CBAM, the CSRD and the CSDDD. The binding obligations sit in those individual measures.

Does the EU Green Deal apply to businesses outside the EU?‍

Not directly. EU directives bind EU companies and some large non-EU groups with significant EU activity. Non-EU businesses are most often affected indirectly, through CBAM when exporting covered goods to the EU, or through data requests from EU customers and partners.

What changed under the EU Omnibus?‍

The Omnibus simplified several Green Deal rules. It raised the thresholds for the CSRD and the CSDDD so they apply only to the largest companies, removed the CSDDD's mandatory climate transition plan requirement, introduced a value chain cap protecting smaller suppliers, and added a 50-tonne exemption to CBAM. The climate goals themselves were not changed.

Will my mid-market business have to report under the CSRD?‍

Most likely not. After the Omnibus, the CSRD applies to companies with more than 1,000 employees and over €450 million net turnover. Smaller businesses are more likely to encounter it indirectly, through customers that report and ask for supplier data.

Are the simplified ESRS final?‍

Not yet. The Commission published draft simplified standards in May 2026 and the consultation closed on 3 June 2026. The original 2023 standards remain in force until the revised version is formally adopted, which is expected later in 2026, with application from financial year 2027.

When did CBAM start charging for imports?‍

CBAM's definitive regime, in which importers pay for the embedded emissions of covered goods, entered into force on 1 January 2026. Before that, from October 2023, it ran as a transitional reporting-only phase.

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