Stockholm (NordSIP) – In November 2024, following the publication of a competitiveness report by Mario Draghi, ex-Italian prime minister and ex-President of the ECB, European Commission (EC) President Ursula von der Leyen announced that the EC would propose an EU Omnibus sustainability regulation in 2025. Now the EC has revealed new details.
The EU Omnibus regulation, will aim to rationalise and cut regulatory requirements under the Corporate Sustainability Reporting Directive (CSRD), EU Taxonomy and the Corporate Sustainability Due Diligence Directive (CS3D). Confirming this announcement and elaborating on last year’s announcement, the EC discussed its intentions regarding the EU Omnibus in its 2025 Competitiveness Compass report, published on January 29th.
“The first Omnibus will, among others, cover a far-reaching simplification in the fields of sustainable finance reporting, sustainability due diligence and taxonomy. In line with the objectives of the sustainable finance framework to mobilise investment in the clean transition, the Commission will ensure better alignment of the requirements with the needs of investors, proportionate timelines, financial metrics that do not discourage investments in smaller companies in transition, and obligations proportionate to the scale of activities of different companies,” the report notes.
A more detailed proposal is likely to be published shortly after the European Commission’s meeting on 26 February 2025.
Focus on Deregulation, not the Environment
The main focus of the compass was to address the competitiveness concerns raised by the Draghi report and it was in this context that the Omnibus bill was discussed. Indeed, the report seemed focused on adjusting regulations to the appropriate size of companies, including by creating an added regulatory category of firms for the purpose of better matching the needs and capacities of all firms.
“[The Omnibus] will notably address the trickle-down effect to prevent smaller companies along the supply chains from being subjected in practice to excessive reporting requests that were never intended by the legislators,” the EC explained. “To ensure proportionate regulation adapted to companies’ size, a new definition of small mid-caps will soon be proposed. By creating such a new category of company, bigger than SMEs but smaller than large companies, thousands of companies in the EU will benefit from tailored regulatory simplification in the same spirit as SMEs. The Commission is also preparing a simplification of the Carbon Border Adjustment mechanism for smaller market players.”
Furthermore, the Commission will facilitate doing business for thousands of small mid-cap companies. The Compass sets a target of cutting by at least 25% the administrative burden for firms and by at least 35% for SMEs.
“Europe has everything it needs to succeed in the race to the top. But, at the same time, we must fix our weaknesses to regain competitiveness. The Competitiveness Compass transforms the excellent recommendations of the Draghi report into a roadmap. So now we have a plan. We have the political will. What matters is speed and unity. The world is not waiting for us. All Member States agree on this. So, let’s turn this consensus into action,” Ursula von der Leyen, President of the European Commission, said on this occasion.
Civil Society Concerns
In an open letter to the European Commission, the Danish Institute for Human Rights, together with nine sister organizations from across Europe, recognised the need to enhance policy coherence, consistency, and clarity in sustainability-related legal requirements for companies. However, they stress that the announcement of the Omnibus proposal has created uncertainty for a broad range of stakeholders.
“We are concerned that this process could jeopardize the broader contents of these laws, the momentum around corporate sustainability and sustainable finance in the EU, and unintentionally disadvantage companies that have already invested significantly in anticipation of legal requirements,” the letter states.
“The EU’s policy and regulatory actions to address pressing sustainability issues are a long-awaited response to the legitimate expectations of rightsholders and other stakeholders for enhanced respect for human rights and the environment in business activities. These actions reflect the results of public consultations with all stakeholders.”
“We call for the integrity of the instruments to be respected and for the European Commission to focus its efforts on facilitating effective implementation. Priority should now be given to developing guidance and other accompanying measures and guidelines by the European Commission,” the signatories write, calling for NHRIs to be actively consulted in this process.
