When the EU Commission released its Omnibus proposal and accompanying “Stop the Clock” directive, we noted that despite delays for wave 2 and wave 3 reporters, wave 1 companies were given no relief. This seemed odd because the Omnibus proposes changes that would push some wave 1 companies out of scope. It appears that the European Commission is aware of this gap and is seeking to fill it. According to Responsible Investor, the EU Commission is considering a delegated regulation which would water down reporting requirements for some wave 1 companies:
“In the commission’s latest draft proposal, firms with fewer than 750 employees would be exempt from disclosing gross Scope 3 emissions for three years, as well as all biodiversity and social disclosure requirements… Companies would also no longer be required to report on the anticipated financial effects from material physical and transition risks and potential climate-related opportunities, or from pollution-related and water and marine resources-related impacts, risks and opportunities.”
The Commission is still ironing out the details of the forthcoming delegated regulation and the scope of companies qualified for relief may change. Unlike the complete pause in reporting for waves 2 and 3 under “Stop the Clock,” these smaller wave 1 companies would be required to report, but the reporting burden would be drastically reduced. A lot of proposals are flying around right now regarding EU ESG reporting, and not all are equally likely to become law. We’ve seen more extreme positions put forward that are less politically viable. However, this delegated regulation is in line with the reasoning of the already passed “Stop the Clock” directive and simply extends partial relief to wave 1 companies. This regulation is one to have on your radar, and we’ll be updating you on its progress here on the blog.
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