This week’s EU Omnibus developments

It’s been a busy week for EU lawmakers, who have moved to cut back the Green Claims Directive, the Carbon Border Adjustment Mechanism and the Batteries Regulation in recent days.

On the simplification omnibus, Real Economy Progress covered the news that EFRAG wants to cut the European Sustainability Reporting Standards (ESRS) in half, and has asked the Commission for extra time to revise them.

On Wednesday, the European Fund and Asset Management Association told Investment & Pensions Europe that it had pinpointed 150 key data points and 26 general policies that companies should disclose to investors, which it is communicating to EFRAG.

Political negotiations

The Council of the European Union has also been causing a stir this week.

It circulated its fifth compromise text, outlining – among other things – plans to push for the scope of the Corporate Sustainability Due Diligence Directive (CS3D) to be further reduced.

According to reports, Poland, whose council presidency ends this month, wants the law to apply only to companies with more than 5,000 employees and €1.5bn in turnover.

It also wants transition-plan requirements to be postponed until 2030.

The amendments were discussed in a Council meeting on Wednesday, but there is currently little clarity on whether other Member States will support the plans.

Despite many insiders saying recently that they expected the Council to prolong its internal negotiations, it now looks set to finalise its position in a vote next week.

Parliament is still scheduled to decide its position at the end of the year, but chief omnibus negotiator Jörgen Warborn provided some insight into the direction of travel last week, when he published his draft proposal.

Like the Polish council presidency, the Swedish MEP, who belongs to the centre-right European People’s Party, wants to go beyond the reductions in scope and ambition tabled by the European Commission.

Some of Warborn’s recommendations are likely to be exaggerated, to give him more room to compromise with progressive MEPs during the upcoming parliamentary negotiations.

Members of the legal affairs committee that oversees Parliament’s handling of the omnibus file will have a chance to submit amendments in coming weeks, before technical discussions begin in July.

ESMA issues statement

This week also saw the European Securities and Markets Authority (ESMA) address what it described as “uncertainty” caused by the introduction of the omnibus and the inconsistent roll-out of CSRD across EU Member States.

In a formal statement, it reiterated that national and regional supervisors will be “proportionate and realistic” when enforcing the application of ESRS, because it will be “a learning curve for all parties”.

ESMA added that its Guidelines for Enforcement of Sustainability Information, which came into force in January, contain “built-in flexibilities” that allow national competent authorities (NCAs) to adapt their supervisory approach “to the current context”.

“NCAs can play a supportive role by highlighting areas where issuers can improve their reporting, for example through dialogue and other informal measures and keeping in mind the uncertainty related to the evolving regulatory context,” it said.

“Where necessary, NCAs will use enforcement actions.”