This week’s EU Omnibus developments

A rundown of who is saying what this week, and what more we know about plans to revise Europe’s sustainability rules

It’s been a big week for the European Sustainability Reporting Standards (ESRS).

EFRAG launched its long-awaited consultation on plans to streamline the standards on Thursday.

There are no big surprises: the proposals seek to reduce the mandatory indicators by 57%, rising to 68% if voluntary criteria are also considered.

They also attempt to reduce duplicative reporting by allowing information to be disclosed just once, in the most relevant section of the ESRS, rather than multiple times throughout.

The proposals put much more emphasis on the role of the materiality filter, insisting that companies aren’t obliged to report on irrelevant or minor sustainability impacts, risks or opportunities.

The deadline for feedback is September 20th, and so far there have been some grumbles about the lack of clarity around what counts as “fair presentation” under the proposed regime, and calls for a full list of the 450+ indicators EFRAG plans to remove.

Respondents can either send a letter or complete a survey providing their feedback.

In the meantime, EY has published an example of best practice reporting against the current ESRS, using a fake company called Good Group ESRS Brewery (International) Limited.

The case study imagines the company’s second year of ESRS application, including its subsidiaries.

VSME adoption

The other big development this week was the European Commission’s adoption of the VSME, which are voluntary sustainability reporting standards for non-listed small and medium-sized companies.

Recommended by EFRAG, the VSME is supposed to make it easier for smaller companies to provide bigger ones (including financial institutions) with the information they need to help them comply with their CSRD obligations.

It a non-legislative tool that mirrors the ESRS, but in a streamlined form.

There are two modules: one with just 11 disclosures on things like Scope 1 and 2 emissions, and anti-corruption; and a more comprehensive module with nine additional disclosures.

EFRAG welcomed the Commission’s decision to adopt the VSME recommendation, and said it would host a public event in September to discuss “next steps” and help with implementation.

Notably, the VSME is not the voluntary standard for entities likely to be removed from CSRD’s scope under the current Omnibus proposals – that’s a different set of rules, which won’t be developed until CSRD has been amended.

They’ll be legislative in nature (namechecked in CSRD and developed via a delegated act) and likely to be based on the VSME, but tailored for companies with between 250 and 1,000 employees.

Exxon sets sights on CS3D

In the US, ExxonMobil’s chief executive Darren Woods urged the Trump administration this week to take on the EU Corporate Sustainability Due Diligence Directive, accusing it of exposing companies to “bone-crushing penalties” if they abuse human or environmental rights.

Woods told reporters the current regime was “counter, frankly, to everything the Trump administration has been trying to do on the regulation front”, according to the FT.

“As the US administration eases US regulatory burdens on companies here in the US, it is being replaced by EU climate regulations,” he added, saying the rules should be put on the table as part of trade negotiations between the US and EU.