If you’ve been reading reports about the EU’s position on simplifying regulations – specifically the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CS3D), you might think that the Omnibus proposal specifically calls out those Directives and offers some details. That isn’t really the case based on a leaked “Competitiveness Compass for the EU.” Reports indicate this document will be formally published tomorrow (January 29).
Since the document technically isn’t publicly available (although it has been posted on LinkedIn), I won’t include a link here. However, I pulled a handful of excerpts that most directly touch on CSRD, CS3D and the Carbon Border Adjustment Mechanism:
This Commission will deliver an unprecedented simplification effort. This will aim to achieve the agreed policy objectives in the simplest, most targeted and least burdensome way. This will start with a first Simplification Omnibus proposal next month, including far-reaching simplification in the fields of sustainable finance reporting, sustainability due diligence and taxonomy.
… a new definition of small mid-caps will be proposed next month. By creating such a new category of company, bigger than SMEs but smaller than large companies, up to 31.000 companies in the EU will benefit from tailored regulatory simplification in the same spirit as SMEs…
Strengthening the business case for decarbonisation also requires lead markets and policies to reward European companies choosing to be early movers, through new measures to encourage demand for their low-carbon products, such as benchmarking/labelling, preference in public procurement or financial incentives through contracts for difference…
The situation of energy intensive industries included in the European carbon pricing system and the need to minimise cases of circumvention and unintended consequences on value chains will inform the forthcoming review of the Carbon Border Adjustment Mechanism. This will reinforce its underlying logic of preventing ‘carbon leakage’ and ensuring a greater impact in terms of promoting an international level playing field and global carbon pricing, while preserving the competitiveness of EU industries.
Zach’s thoughts on the document:
While other policies are called out specifically, CSRD and CS3D will be dealt with in the Omnibus legislation (only mentioned twice in this document). The references are vague and don’t give exact details on what’s going to be done other than general “simplification.” You can see nods to that legislation, for instance – “The Commission will take the necessary steps to deliver on the goal to cut by 25% the reporting obligations for firms and by 35% for SME.”
We still have to wait on meaningful, clear guidance.
Members can learn more about CSRD and disclosing ESG generally here.
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Photo credit: Ajdin Kamber – stock.adobe.com
