EU’s Sustainability Rollback May Spark Climate Lawsuits, Experts Warn

The European Commission’s recent move to scale back corporate sustainability requirements is stirring alarm among some of Europe’s top legal minds, who warn it could dramatically increase the risk of climate change-related lawsuits against major European companies. In February, the Commission proposed loosening key rules governing corporate sustainability, arguing that European firms are weighed down by excessive regulatory burdens that make it harder to compete globally, particularly with rivals in China and the United States.

At the heart of the proposed changes is a controversial adjustment: large companies would still need to have a “transition plan” showing how they aim to align with the EU’s ambitious greenhouse gas emissions targets, but crucially, they would no longer be legally required to implement that plan. Critics say this shift effectively reduces climate action to a box-ticking exercise, with little accountability for real-world progress.

“Mere paperwork, instead of good faith action, would suffice in meeting the obligation,” a group of 31 prominent legal scholars wrote in a letter published Friday, warning that the EU’s rollback could set the stage for a surge in lawsuits. Among the letter’s signatories are Thom Wetzer, Associate Professor of Law and Finance at the University of Oxford; Christina Eckes, Director of the University of Amsterdam’s Centre for European Law and Governance; and Wolf-Georg Ringe, Director of the Institute of Law and Economics at the University of Hamburg. Together, they argue that without binding rules compelling companies to act on their sustainability promises, firms may face increased liability risks, particularly in the form of court cases brought by plaintiffs citing harm to the environment and public health.

Already, major European companies like TotalEnergies and Eni are grappling with lawsuits demanding they align their corporate behavior with global climate goals. The legal scholars point to these pending cases as evidence of the rising legal risks companies face — risks that could intensify if regulatory frameworks are weakened. “The absence of a binding regulatory framework will correspond directly with increased liability risks for private actors,” the scholars emphasized.

When asked for comment, a European Commission spokesperson declined to directly address the scholars’ letter but reiterated that the Commission’s proposals aim to simplify life for businesses while maintaining the EU’s commitment to cutting carbon emissions. The proposals will now undergo a lengthy negotiation process with the European Parliament and member states, one that could take more than a year to finalize.

European business groups have long argued that heavy-handed regulations stifle innovation and reduce their competitiveness, particularly after the Trump administration’s aggressive deregulation efforts in the United States raised pressure on Brussels to rethink its rulebook. However, environmental campaigners warn that softening sustainability rules at this moment, when climate science calls for stronger, not weaker, action, risks eroding corporate accountability just as the climate crisis intensifies.

For European companies, the stakes could not be higher. Even if legal obligations are reduced, the growing wave of climate litigation around the world signals that firms ignoring their climate responsibilities do so at their peril. Courts are increasingly recognizing the duty companies have to mitigate environmental harm, and plaintiffs are eager to test those boundaries. As the debate unfolds in Brussels, European businesses find themselves at a pivotal crossroads: balancing competitiveness with the urgent need for meaningful, enforceable climate action, all while keeping a wary eye on the legal risks waiting just around the corner.