After evaluating the details of the proposed Simplification Omnibus Package which seeks to consolidate the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), EU Taxonomy, and the Carbon Border Adjustment Mechanism (CBAM) it is clear that the European Commission has listened to the business community.
The Simplification Omnibus package is a positive step towards the Commission’s goal to reduce reporting by 25% for all companies and 35% for SMEs. Moreover, it is important to note that reducing reporting requirements and costs without undermining the goals of these legislations is vital to achieving the end goal: making Europe more competitive while decarbonising and reducing its dependencies. This will help to support the EU’s strategic autonomy.
Some of the notable proposed changes for the CSRD include a different threshold of companies under scope to encompass companies with over 1000 employees and a net turnover of EUR 50 million annually. This puts the CSRD in greater alignment, with the CSDDD. This in itself will help to create legal certainty for businesses. However, we wonder whether this new threshold of companies with over 1000 employees and EUR 50 million in net turnover is in and of itself a new and larger mid-cap definition. If so, we would like to encourage the Commission to communicate with us on creating a larger mid-cap definition that can work with the small mid-cap definition that they are currently working on. We think the EU needs to create a mid-cap category consisting of mid-caps of different sizes: small mid-caps, then medium and larger mid-cap definitions should be made. EFB remains available to assist in determining these thresholds so that the EU can support its companies to scale up.
Additionally, the proposed change to the threshold of CBAM requirements to exclude from obligations those below the threshold of imports of CBAM goods up to 50 tonnes per year will help alleviate the pressure felt by SMEs and individuals who under the existing proposal would have to comply with obligations. The threshold will be reviewed and adjusted on an ongoing basis.
The proposal to postpone the reporting implementation for companies under the CSDDD and CSRD is an important opportunity for the European institutions to work on the specificities of these legislations and evaluate where improvements can be made to give companies legal certainty. The issue of gold-plating at the national level regarding the transposition of these legislations will need to be discussed. It is up to Member States to implement these directives similarly in order to reduce the complexity faced by businesses in their respective countries as well as when they operate across borders within the Single Market. This is vital for the EU’s competitiveness.
The proposed CSDDD adjustments to the scope which would be limited to direct suppliers only, and the overall reduction in the frequency within which supplier monitoring would take place if approved, will decrease costs and red tape for a vast number of companies. However, the specificities need to be ironed out to ensure that businesses in the CSDDD’s scope understand what data points are available to them.
As we continue to analyse what the Simplification Omnibus proposal means for Europe’s family businesses, we encourage the European Commission and European Parliament to engage with companies and the industrial base of Europe. Speak to entrepreneurs in your national countries and consider their concerns when making policy and improving policy proposals. EFB endeavours to continue being a bridge between local family businesses and the EU institutions.