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
The head of the European Commission’s capital markets arm appeared to bite back against widespread criticism of its sustainability agenda on Thursday.
In a LinkedIn post, John Berrigan put the blame for the EU’s overly complex laws squarely on European Council and Parliament, saying “Level 1 legislation must be agreed with a majority of Members of Parliament and 27 Member States, all with their own specificities and limited appetite to change domestic arrangements”.
“The result is often a compendium of many national preferences and other interests that together makes our rulebook more complicated than needed and less effective than it should be.”
The Commission is “not primarily to blame for these outcomes” he insisted, but it is complicit.
“We often reject simple solutions from the beginning because we anticipate that such solutions will not attract sufficient support from the EU co-legislators.”
Berrigan acknowledged how messy Level 2 and 3 rules can be, too – in part down to the European Supervisory Authorities, he claimed – and said the Commission needed “buy-in” from all those involved in order to make the rulebook simpler for companies.
The Omnibus proposal, he said, “is a test of how the co-legislators will embrace the simplification agenda”.
Further changes to reporting rules?
On Wednesday, Polish MEP Janusz Lewandowski provided some more insight into that process, by presenting the draft amendments being considered by the Parliamentary committee in charge of the omnibus proposal.
Most significantly, it looks as if the Committee on Economic and Monetary Affairs (Econ) will push for an increase to the Corporate Sustainability Reporting Directive’s (CSRD) thresholds, meaning that only companies with more than 3,000 employees will be covered (rather than the current 1,000).
This will bring it in line with the Corporate Sustainability Due Diligence Directive (CS3D), and means there may be fewer companies covered by CSRD than were covered by its predecessor, the Non-Financial Reporting Directive.
The Econ committee also wants the European Sustainability Reporting Standards (ESRS) to align with global standards, and to include some loose sector-specific guidelines.
On Tuesday, the chair of EFRAG’s Sustainability Reporting Technical Expert Group said its members were working on “aligning [ESRS] as much as possible” with the language in the International Sustainability Standards Board in overlapping areas.
Chiara Del Prete stated her colleagues would “reduce substantially the number of mandatory data points,” with a focus on “qualitative” ones.
“We intend to delete the data points that are least important, less decision useful and not needed to meet the relevant disclosures objectives defined in Level One,” she said.
Del Prete also revealed that EFRAG had received more than 800 responses to the four-week consultation it launched last month on revisions to the ESRS.
During the same meeting, a senior official for the European Commission explained that it would introduce a ‘quick fix’ delegated act to stave off additional reporting requirements for large companies in the ESRS.
More opinions from companies, investors and supervisors
A survey of more than 1,000 companies from 26 countries published this week shows that most aren’t happy with the omnibus package.
According to the non-profit WeAreEurope, which undertook the poll, around the same proportion of respondents (54%) said they were at least somewhat satisfied with CSRD.
More than half of companies with between 500 and 1,000 employees said they should remain in scope of the Directive.
The survey comes on the heels of the European Central Bank saying it wants the thresholds for CSRD kept at 500 employees, as part of an unusual decision to publish its views on the omnibus package.
The ECB said it supported the overall objective of simplifying the rules to make companies more competitive, but that there could be competitive disadvantages if non-European firms were carved out of the requirements
It also warned lawmakers not be ambiguous about whether firms needed to enforce their climate transition plans as part of CS3D.
Frank Elderson from the European Central Bank reiterated his previous warnings that if the omnibus reduces banks’ access to sustainability data, they will have to go back to requesting it directly from the companies they lend to.
Elsewhere in the world of finance, the lobby groups for the European pensions and asset management industries put out their positions on the Omnibus this week.