Exposed Document Indicates Less Strict EU Sustainability Reporting Standards
The European Union is planning to revamp its sustainability regulations, aiming to reduce the burden on businesses. This reform involves reviewing the EU Taxonomy, Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD), under the Omnibus Simplification Package. Originally slated for release on February 26, a leaked draft of the package emerged on LinkedIn on February 22.
The leaked draft focuses on easing requirements for small and medium-sized enterprises (SMEs), such as eliminating their reporting requirements, raising reporting thresholds in line with CSDDD, and limiting what SMEs are asked to report by large companies.
The EU's Green Deal initiative introduced a series of directives in 2020, 2023, and 2024 to force businesses to tackle climate change and report carbon emissions. The EU Taxonomy established a classification system for green activities, while the CSRD mandated reporting of GHG emissions and other environmental, social, and governance actions. The Corporate Sustainability Due Diligence Directive introduced additional reporting requirements and legal liability for companies related to their supply chain.
Ursula von der Leyen, the European Commission president, announced in mid-November that the Council and Commission would present an omnibus bill, aimed at reducing excessive regulations. However, the release has been postponed due to a lack of consensus on the final proposal, causing speculation of a possible March release.
Key proposed changes to the CSRD include raising the threshold for EU companies to report, removing mandatory sustainability reporting for listed companies, limiting what reporting companies can ask from SMEs, and raising the threshold for non-EU companies.
The final negotiated language for the Omnibus Simplification Package's impact on CSRD is yet to be determined. Once debate begins, amendments may occur, but the leaked draft suggests potential adoption of these changes. The package ultimately aims to simplify and streamline sustainability reporting requirements while maintaining EU sustainability commitments.
Sources:1. Brussels Briefing. (2023, February 22). EU drafts Omnibus Proposal to Simplify Sustainability Reporting. link2. Commission Urges EU to Ease Sustainability Reporting Burden for SMEs. (2023, February 23). link3. The Council and European Parliament. (n.d.). Corporate Sustainability Reporting Directive. link4. Environmental Finance. (2023, February 24). EU waste trade set for overhaul with new draft legislative package. link
- The leaked Omnibus Simplification Package, initially scheduled for February 26, has been discussed extensively on LinkedIn due to its potential impact on the Corporate Sustainability Due Diligence Directive (CSDDD) and other sustainability regulations in the EU.
- The Corporate Sustainability Reporting Directive (CSRD) is one of the directives under review in the European Union's Omnibus Simplification Package, which aims to reduce burden on businesses by streamlining sustainability reporting requirements.
- According to the leaked draft of the Omnibus Simplification Package, European Union regulations may be revised to provide relief for small and medium-sized enterprises (SMEs), such as CSDDD, by eliminating their reporting requirements and raising reporting thresholds.
- The Corporate Sustainability Reporting Directive, introduced as part of the EU's Green Deal initiative in 2020, linked the likelihood of reduced reporting requirements for EU companies to the passing of the Omnibus Simplification Package in 2023.
- By February 22, 2023, the Corporate Sustainability Due Diligence Directive, Corporate Sustainability Reporting Directive, and EU Taxonomy were all part of the Omnibus Simplification Package, which was supposed to bring simplification to the regulations but is now undergoing revisions due to the lack of consensus.
- As the finalized language for the Omnibus Simplification Package's impact on CSRD remains uncertain, the package may face potential amendments and adjustments to the likelihood of reduced reporting requirements for listed companies within the European Union by 2025, as per the CSRD directive.