Trade associations publish first wishlists for EU Omnibus
Halt CS3D, cut CSRD and ditch transition plans, says ERT as German business group asks for ‘complete withdrawal’ of current CSRD rules
One of Europe’s most influential business groups has made a sweeping set of demands focused on culling the EU’s sustainability laws.
The European Roundtable for Industry, known as ERT, is calling for the Corporate Sustainability Due Diligence Directive (CS3D), the Corporate Sustainability Reporting Directive (CSRD) and the Taxonomy Regulation to be majorly watered down under the planned ‘omnibus package’, and for other laws to be added to the proposal.
In a statement published on Tuesday, ERT said that, while the three rules could help firms meet their climate goals, its members “strongly support” efforts to streamline them.
The group’s members include the CEOs and chairs of major companies like Veolia, Heineken, Philips, GSK and Siemens.
Nestle and Unilever are members of ERT, but were included in a disclaimer saying they “consider the CSRD and CS3D to address legitimate societal concerns and promote ownership and cooperation along the value chain”.
“In this context, they only support measures that lead to simplification, clarification, avoidance of duplication and a reduction in the overall bureaucratic burden,” it said.
Fellow member L’Oreal expressed the same views, but for CS3D only.
None of the other 58 companies represented by ERT (see table) were identified as opposed to any of its 10-page list of requests, which ranged from significant reductions and delays to CS3D, CSRD and the taxonomy, through to higher thresholds for the Carbon Border Adjustment Mechanism, amendments to the EU Batteries Regulation, and a “decluttering” of tax law – the last three of which are not currently part of the proposed Omnibus.
CSRD
The statement calls on the EU to shelve plans to develop sector-specific standards for corporate reporting, and review the existing European Sustainability Reporting Standards (ESRS) “as early as 2025” with a view to reducing the requirements for the first wave of companies covered by CSRD.
“The overarching aim should be the harmonisation of sustainability reporting requirements, to develop a unified global sustainability reporting standard similar to IFRS,” ERT said, referring to financial reporting standards developed by the same body that runs the International Sustainability Standards Board (ISSB) and the Sustainability Accounting Standards Board (SASB).
“Finding an agreement with the ISSB to use SASB as European sector-specific standards will avoid a lot of duplication and enhance efficiency,” said ERT.
ISSB’s standards are fundamentally different from the ESRS, because they only ask companies to explain how sustainability topics might affect their ability to do business – they don’t require transparency about how businesses impact sustainability.
ERT called for a “vast” simplification of the Double Materiality Assessment rules for CSRD, and insisted that it was “of the utmost importance to eliminate the request of collecting quantitative data along the value chain”. There should be no obligation beyond direct suppliers and clients, it added.
It also wants the EU to broaden exemptions under the ESRS, to allow more things to be treated as commercially sensitive, and for all data points relating to capital and operational expenditure to be removed.
A ‘comply-or-explain’ approach should be adopted, so that companies can avoid being penalised for areas they are “not able” to report on, ERT said.
Taxonomy
To deliver the 25% reporting reduction – and in response to the apparent lack of evidence that taxonomy reporting contributes to decarbonisation – the statement argues that the EU’s green framework “should be overhauled completely”.
It calls for materiality thresholds to be introduced for CapEx, the complete removal of OpEx metrics, and a paring back of the Do No Significant Harm rules.
Human rights safeguards should be axed “to reduce the reporting and auditing effort”, ERT suggested, because human rights are covered by CS3D.
CS3D
Elsewhere, ERT calls for the EU’s incoming due diligence rules to be “put on halt” while their impact on the competitiveness of European businesses is evaluated.
A simpler version of CS3D (it mentions at one point in the statement the possibility of merging the law with CSRD) should include a smaller scope and the removal of transition plan requirements.
Other bodies making demands
The London Stock Exchange Group also published its requests for simplifying the EU’s regulatory agenda today.
Despite being on more than one of the EU expert groups that helped design the rules, LSEG said they had become too burdensome. It called for a series of changes to the taxonomy and financial product rules to make investments in polluting companies that are transitioning to a net-zero economy easier, and to cut reporting requirements.
Likewise, German business association BDA has outlined its demands, which include a “complete withdrawal of the [CSRD’s] delegated act in its present form” and changes CS3D so it only requires due diligence on Tier One suppliers.