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
Tensions among Member States became clearer this week with the release of a working paper on the EU Omnibus.
The 200+ page document pulls together the viewpoints of 14 European countries on current plans to simplify the Corporate Sustainability Due Diligence Directive (CS3D) and Corporate Sustainability Reporting Directive (CSRD).
While there was general support for the European Commission’s proposal, there were numerous points of disagreement: Luxembourg called for auditing rules to be relaxed, Estonia is pushing for parts of CS3D to be made voluntary, and Germany doesn’t think companies should have to disclose commercially sensitive information.
Sweden said it was in favour of limiting the data large companies could request from their suppliers, but said the Commission “should not prevent parties from making an agreement, on a contractual basis, to provide and receive additional information”.
A handful of Member States look set to campaign for CSRD to cover fewer companies by aligning it with CS3D – something also being considered by Parliament.
The current proposal, argued Germany, “appears to be stopping half-way”.
“On the one hand, [the Commission] proposes to raise the net turnover threshold to €450m with regard to third-country undertakings… On the other hand, however, EU companies do not benefit the same way since for them the net turnover threshold remains unchanged (i.e. €50m).
“There should be full alignment by introducing a €450m net turnover threshold,” it concluded.
Spain called for “a more coherent and informed negotiation process”.
Carmaker lobby publishes position
The European Automobile Manufacturers’ Association (ACEA) also issued its position on the Omnibus this week.
The trade body made nine requests, including making CSRD disclosures voluntary for Wave One companies until “legal clarity exists” and standardising reporting timelines across Member States.
It wants the EU to harmonise expectations on climate transition plans across all regulation, reduce auditing requirements and remove the obligation for its members to terminate contracts with “critical suppliers” in breach of CS3D.
UN pushes back against due diligence reforms
The UN High Commissioner for Human Rights has also waded in on the future of the CS3D.
In a commentary on the Omnibus, Volker Türk warned EU lawmakers that “while some streamlining of the EU corporate sustainability regime could be advantageous, it would be counterproductive to water down its alignment with international standards, in particular the UN Guiding Principles on Business and Human Rights”.
He said that the current proposal “will probably lead to more complicated and burdensome processes for companies”.
ISSB calls on EFRAG to seize ‘opportunity’
The International Sustainability Standards Board (ISSB), on the other hand, seems more bullish.
Speaking on PwC’s latest sustainability webcast, ISSB member Elizabeth Seeger described the Omnibus as “an opportunity”.
She said EFRAG, the body overseeing the development of the revised European Sustainability Reporting Standards, had been “asked by the European Commission, I believe, to align as fully as possible with international standards”.
Seeger suggested EFRAG “takes the opportunity to learn from what the ISSB has done to build on top of that, rather than recreating a new set of expectations for companies”.