EU Omnibus Package: Commission Aims to Simplify Corporate Sustainability Regulations
The European Commission has adopted a new package of proposals “to simplify EU rules, boost competitiveness, and unlock additional investment capacity.”
Announced yesterday (26 February), the ‘Omnibus’ packages simplify rules surrounding the Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the delegated acts of the EU Taxonomy Regulation, and the Carbon Border Adjustment Mechanism (CBAM), fundamentally changing the EU’s reporting landscape.
Key features include removing around 80% of companies from the CSRD’s remit, limiting EU Taxonomy reporting obligations to the largest companies, and simplifying sustainability due diligence requirements, with a particular focus on reducing costs/burdens for SMEs.
The Commission estimate that if accepted and applied as laid out today, the proposals will raise “total savings in annual administrative costs of around €6.3 billion and to mobilise additional public and private investment capacity of €50 billion to support policy priorities”.
President of the European Commission, Ursula von der Leyen said, "Simplification promised, simplification delivered! We are presenting our first proposal for far-reaching simplification. EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy. This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way".
The proposals have gained mixed reviews elsewhere. Earlier in February (4th), a joint statement published by three leading European investor membership bodies - European Sustainable Investment Forum (Eurosif), The Institutional Investors Group on Climate Change (IIGCC) and the Principles for Responsible Investment (PRI) - and supported by more than 200 investors and other financial sector actors, warned that "reopening these regulations in their entirety risks creating regulatory uncertainty and could ultimately jeopardise the Commission’s goal to reorient capital in support of the European Green Deal.”
Following the official announcement of the Omnibus packages, Eurosif issued a further statement (February 27), with Aleksandra Palinska, Executive Director commenting: “The proposal aims to reduce the number of in-scope companies by over 80%. Drastic changes to the scope of sustainability reporting rules will limit investor access to comparable and reliable sustainability data and impair their ability to scale-up investments for industrial decarbonisation and long-term growth. Voluntary reporting from companies will not fill this data gap.”
In contrast, the European Banking Federation welcomed the announcement, believing that the Omnibus packages strike the right balance between competitiveness and sustainability: “These initiatives are important to boost the competitiveness of European companies and support their transitioning efforts.”
For the proposals to take effect, they need approval from both the European Parliament and the Council, and then must be incorporated into national laws. The Commission has suggested speeding up this process to help provide companies with clear guidelines, as if the proposal follows a typical legislative timeline, negotiations may lead to significant changes in the final version and may take years before being formally enacted.
Get a detailed breakdown of the key simplifications and their impact on the Commission's Q&A
Read the full Commission proposals (Omnibus 1 | Omnibus 2) to understand the legal changes introduced
