Deregulating or Derailing? The EU Sustainability Simplification Packages

Despite of multiple historic examples of ambiguous effects of deregulation, the concept has recently become viral. The paper examines how the politics, regulatory agendas, business interests, and sustainability interplay among themselves in the context of the deregulation process announced in the EU and several other jurisdictions recently. In recent years, sustainability has emerged as critical in shaping corporate strategies, investment decisions driven by the public expectations and regulatory frameworks worldwide. ESG rulemaking, grounded in principles of corporate accountability in front of the future, seeks to align business activities with broader societal objectives. Concurrently, a trend toward deregulation characterised by a relaxation of governmental oversight viewed as a path to stimulate economic growth, enhance business competitiveness, innovation, profitability, and reduce compliance burdens has become popular. The study critically analyses whether these approaches can coexist sustainably or if inherent contradictions inevitably lead to policies’ dysfunctions. Through comparative legal analysis, the paper explores regulatory framework within the European Union. It identifies patterns in the interaction between legislative deregulatory trends and the increasing demand from various stakeholders such as investors, consumers, activist groups and advocacy lobbies. A discussion demonstrates instances where deregulation can undermine ESG effectiveness, revealing critical gaps in enforcement and transparency that eventually diminish sustainability and investor confidence. A calibrated regulatory approach advocate neither wholesale deregulation nor rigid regulatory imposition. This framework can harness the benefits of deregulation and preserve essential elements of ESG accountability and rigor. There are critical factors within ESG deregulation that call upon lawmakers, scholars, politicians and business to collaborate in developing regulatory ecosystems capable of adapting to evolving challenges without compromising standards. The exploration contributes to broader scholarly debates on sustainable regulation, corporate governance innovation, multilevel legislation, and the evolving role of business within the European rule-making context.