This week’s EU Omnibus developments
Europe’s auditing and accounting firms weighed in on what’s needed from the EU omnibus this week, telling the Commission to delay and reduce reporting requirements for companies.
The region’s six largest financial services firms – KPMG, Deloitte, EY, PwC, Grant Thornton and BDO – made a series of recommendations in a letter to Valdis Dombrovskis, the Commissioner in charge of simplifying EU law for the next five years.
They ask for a “fundamental review and simplification” of the Taxonomy Regulation, arguing that its technical screening criteria should not be more ambitious than existing sector-specific legislation.
In addition, they want the Commission to delay CSRD requirements for smaller companies covered in the second phase, and let them use a simplified version of the European Sustainability Reporting Standards.
Current transitional provisions for firms with fewer than 750 employees should be lengthened and applied to more companies, argued the six, which operate as a lobby group called the European Contact Group (ECG).
On ‘extraterritoriality’, ECG called for the omnibus to “address equivalence arrangements under which companies from a third-country jurisdiction are permitted to use global sustainability reporting standards”.
UN wades in
The UN’s Working Group on Business and Human Rights has called the Commission out for the way it is handling the omnibus process, saying any changes to regulation should be made on the back of “human rights impact assessments, consultation, and meaningful stakeholder engagement”.
The group “encourages the EU not to reopen the text of the CSDDD,” adding that companies need legal certainty and “simplification, if such is needed, should take place through guidance”.
Government interventions
REP covered a paper published this week by the Finnish Government, warning against making serious changes to EU sustainability laws.
Across the Atlantic, US commerce secretary Howard Lutnick described CS3D as “a real concern for American industry” during his senate nomination hearing on Thursday, and promised to “use all available trade tools” to deal with it.
The Italian finance ministry asked for CS3D to be postponed until “all outstanding issues have been properly addressed” and called for a “tailored postponement of reporting requirements” under CSRD, according to a leaked letter to the Commission.
It doesn’t want changes made to CSRD that would penalise Member States, like Italy, that have already transposed CSRD into national law.
Meanwhile, advisors to the German government are expected to issue a position on the omnibus on Monday, having already published recommendations for specific files this week.
In a tamer set of demands than those made in January by Olaf Scholtz, the country’s Sustainable Finance Beirat said the number of data points should be reduced under CSRD and more sector-specific carveouts should be introduced.
Commission Update
The Commission officially launched its much-leaked workplan this week, confirming three ‘omnibus’ packages: one to ‘simplify’ CS3D, CSRD and the taxonomy, another to carve some mid-sized companies out of EU laws, and a third to focus on improving the bloc’s investment rules.
Alongside the sustainability omnibus, the EU’s non-legislative Clean Industrial Deal will be published this quarter, the work programme shows.
A legislative Industrial Decarbonisation Accelerator Act, Bioeconomy Strategy and non-legislative Transport Investment Plan are slated for later this year.
The Commission will also review the Carbon Border Adjustment Mechanism, and is exploring the possibility of changing the existing thresholds so that, instead of applying to all products worth more than €150, it applies to all products over 100-tons of CO2.