This week’s EU Omnibus developments

The Council of the European Union looks like it’s going to take longer to decide its negotiating position on the Omnibus than previously expected. 

Insiders told Real Economy Progress that the Polish presidency has decided not to pursue a deal in the coming month, as originally planned, and instead hand the file to Denmark when it takes over the presidency later this month. 

The Danish are likely to prolong Council’s process so that their position is agreed at around the same time as European Parliament’s – probably after October.  

That will avoid Council having to revise its position further down the line because of the change in presidency or lobbying efforts that take place while they wait for Parliament to decide on its negotiating position (that’s what happened during the original CS3D discussions).  

Council’s third compromise text came out this week, which shows it will push for a risk-based approach to CS3D, but hasn’t decided yet on whether it should apply to the entire value chain or just Tier One suppliers. 

Insiders say France wants to retain transition plan requirements and a civil liability regime in the directive. 

The Member State is also reportedly leading the call for the scope of the Corporate Sustainability Reporting Directive (CSRD) to be reduced and replaced with a stronger emphasis on voluntary reporting.   

The association for Europe’s pension funds, PensionsEurope, published its position on the Omnibus this week, warning that cutting CSRD’s scope would create risks for investors.

While the rules need to be streamlined, PensionsEurope argued, carving out so many companies would make it harder for private equity investors to assess sustainability-related risks and opportunities, and would force financial institutions to rely on estimated data to comply with their own EU requirements, namely the Sustainable Finance Disclosure Regulation.

Elsewhere, research from an academic at Vienna’s University of Technology found the Commission’s plan to increase CSRD’s threshold to 1,000+ employees would exempt most firms from polluting sectors like cement, real estate, transport and agriculture, while leaving many service-based companies in scope.

The research was based on data for Austrian companies.  

Other research published this week includes a survey of more than 1,300 German companies, published by YouGov, which found that around half of respondents are delaying investment decisions because of current uncertainty around due diligence duties.  

More companies (44%) said they believed CS3D will give Europe a competitive advantage over other regions in the long term than said it won’t (31%). 

Parliament 

Nearly 200 companies, NGOs, trade bodies, auditors and EU citizens responded to a recently-closed consultation on the Omnibus run by Pascal Canfin, the MEP negotiating the omnibus in European Parliament’s legal affairs committee.  

Canfin said on social media that the feedback would “deepen [his] parliamentary work before the deadline for tabling amendments in committee” on June 27th.

In the meantime, the lead negotiator on the Omnibus, Jorgen Warborn, finished his draft report this week. It will be circulated in coming days, once it’s been translated into all the relevant languages, and will provide the foundation for Parliament’s position.