Stockholm (NordSIP) – At the start of November, in response to a report on EU competitiveness by Professor Mario Draghi, ex-prime minister of Italy and ECB President, the European Commission announced it would seek to cut reporting requirements by 25% in 2025. In this context, the President of the European Commission (EC), Ursula von der Leyen, hinted that the amount of reporting under the Corporate Sustainability Reporting Directive (CSRD), EU Taxonomy and the Corporate Sustainability Due Diligence Directive (CS3D), should be cut.
Competitiveness by Cutting Red Tape
The announcement occurred as part of the Budapest Declaration, a 12-point commitment by the EU to “to ensure our common economic prosperity, boost our competitiveness, making the EU the first climate-neutral continent in the world and ensuring the EU’s sovereignty, security, resilience and global influence.”
Building from the September 2024 by Mario Draghi, The Future of European Competitiveness, the fourth item on the Budapest declaration takes aim at regulation. The declaration commits to “launching a simplification revolution, ensuring a clear, simple and smart regulatory framework for businesses and drastically reducing administrative, regulatory and reporting burdens, in particular for SMEs. We must adopt an enabling mindset based on trust, allowing business to flourish without excessive regulation,” the Budapest declaration reads.
“Key objectives to be implemented by the Commission without delay include making concrete proposals on reducing reporting requirements by at least 25 % in the first half of 2025, and including red-tape and competitiveness impact assessments in its proposals,” the declaration explains.
A Consolidating Omnibus Regulation
28 minutes into the press conference, discussing how the EC will fulfil its promise to improve the bloc’s competitiveness, when such promises had already been made in the past without much success, von der Leyen used the example of sustainability reporting requirements as being too unwieldy.
To address this issue, she argued that the EC would propose an omnibus regulation that would consolidate existing sustainable regulation. “We will for example come with a so-called omnibus. Omnibus [legislation] takes from many different files topics to reduce bureaucracy and reduce reporting burdens and put them in one omnibus that we will propose as the Commission and guide through the parliament and the Council. It’s a huge approach to reduce in one step what is agreed to be too much in all the different fields,” von der Leyen argued.
“We will look, for example, at the triangle of the Taxonomy, CSRD, CS3D,” she added more concretely. “The content of the laws is good. We want to maintain it, and we will maintain it. But the way we get there, the questions we are asking, the data points we are collecting – thousands of them – is too much. Often redundant, often overlapping. It’s our task to reduce this bureaucratic burden without changing the correct content of the law that we all want,” von der Leyen added.
This appears to have evolved into a concerted effort at the EU level. At her nomination hearings in the European Parliament, Maria Luís Albuquerque, the Commissioner-designate for Financial Services and the Savings and Investments Union, emphasised ger commitment to promoting sustainable finance “with less reporting requirements and administrative burdens”.
None of the three EU sustainable legislations mentioned by the EC president were directly referenced in the Draghi report.
More Fiddling with EU Legislation?
If taken forward this proposal would represent a big change to the path that the EC is on regarding sustainability. Much like the recent proposal to postpone the EU Deforestation Regulation (EU DR), bringing an omnibus proposal to the Parliament and the Council about these three pieces of legislation would allow them to make more extensive amendments. Given the ongoing shift towards greenhushing, such a proposal could undermine the fabric of the EU’s sustainable disclosures framework.
Commenting on this announcement, Simon Toms, Jonathan Benson, Mary S. Bonsu, Justin Lau and Frank Lech from Skadden, Arps, Slate, Meagher & Flom LLP multinational law firm noted that “while the proposal remains high-level, it is being viewed as a potentially welcome reprieve for companies, given the often overlapping and complex interaction among the CSRD, EU Taxonomy Regulation and CS3D.”
