EU makes proposals for more efficient sustainability reporting
The EU Commission's first omnibus package points in the right direction. However, it remains to be seen whether the simplification of sustainability standards will be successful.
With the Omnibus Simplification Package, the European Commission has taken a meaningful step toward streamlining future reporting obligations and reducing the bureaucratic burden on companies. The German Insurance Association (GDV) explicitly welcomes this initiative while also identifying areas where further improvements are needed.
At the core of the first Omnibus Package is the simplification of regulatory requirements. A key element is the proposal to postpone the application scope of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). This proposal is also referred to as the “Stop-the-Clock” initiative.
The GDV expressly welcomes this postponement — particularly in view of the relief it provides to small and medium-sized enterprises (SMEs).
As part of the “stop-the-clock” proposal the European Commission also expresses its intention to revise the cross-sectoral European Sustainability Reporting Standards (ESRS), which have a general applicability across all economic sectors.
The development of concrete proposals will be carried out by EFRAG (European Financial Reporting Advisory Group), the expert body responsible for advising on and drafting EU accounting standards.
The GDV will contribute with specific proposals to simplify these standards.
Clear and consistent reporting requirements
The GDV also calls for reporting requirements to be clear, understandable, and consistent. In particular, interfaces with reporting requirements under the Taxonomy Regulation as well as other regulatory frameworks such as the Sustainable Finance Disclosure Regulation (SFDR) and the Solvency II Directive should be taken into account and harmonised.
Inconsistent or contradictory requirements not only increase workload but also diminish the effectiveness of sustainability reporting.
Only if the standards are both ambitious and realistic can they fully achieve their intended impact in terms of sustainable corporate governance.