EU: Over 150 BHR experts from legal practice, business, consulting & academia voice grave concerns regarding 'Omnibus' proposal
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Photo: GoodLifeStudio, Getty Images via Canva
'Views from business and human rights advisory practice and academia on the EU omnibus proposal'
Our key messages are:
- ...The CSDDD is not a reporting law and therefore should be excluded from the ‘Omnibus’.
- The CSRD is focused on reporting, but the European Sustainability Reporting Standards (ESRS) underpinning the CSRD can be amended without recourse to primary legislation. Similarly, the Taxonomy can be amended via its delegated acts.
- Changing the rules at this late stage will punish leaders in corporate sustainability who have invested in the compliance process, and reward laggards who have not.
- We should focus on the efficient implementation of the laws through delegated acts and guidance to help companies and their advisors avoid misguided implementation...
Turning to our concerns about the ‘Omnibus’ proposal, these fall into three main categories...
1) Confusion and false incentives
- The ‘Omnibus’ has resulted in a great deal of confusion and uncertainty...
- Whilst there is a degree of complexity to the requirements of the CSRD, CSDDD and Taxonomy, they are increasingly being understood by companies, many of whom are embracing not just the letter of the laws but their spirit, as articulated in the UNGPs and OECD Guidelines. This is leading to improvements in corporate understanding of supply chains and a more collaborative engagement with suppliers. The ‘Omnibus’ risks setting back this progress.
2) Necessity
- The EU Commission talks of an arbitrary target of reducing reporting requirements by 25% and of otherwise ‘streamlining’ legislative requirements. As professionals who regularly interact with or work inside companies that fall within the scope of these laws, we understand and sympathise with the goal of ensuring that requirements... are streamlined, integrated and efficient. However, we do not think that reopening the legislative procedures around the CSDDD, CSRD and Taxonomy is required to achieve this. The instruments are already largely harmonised and based on the same principles. Moreover, we must ask why sustainability reporting in particular is being targeted for ‘burden reduction’ while other forms of reporting requirements, including financial, are not...
- The detailed requirements are laid out mainly on a sublegal level and in delegated acts: the ESRS, the delegated acts for the Taxonomy and the (future) CSDDD guidelines. These requirements can be modified without touching primary legislation and could be an effective vehicle for ‘streamlining’ on an ongoing basis...
3) Green Deal at risk
- ...If the ‘Omnibus’ involves reopening the CSDDD, CSRD and Taxonomy, we fear that this could lead to intense calls by those lobbying in favour of the corporate status-quo-ante to renegotiate core questions about these laws. This could cause the entire Green Deal project to collapse, which we cannot afford in the face of climate change and ongoing human rights and environmental harms.
- The CSDDD, CSRD and Taxonomy were developed jointly by the Commission, Parliament and Council... over three years; the result was a compromise all can accept. The ‘Omnibus’ is being developed just months after the conclusion of this process and within a few weeks, with little or no consultation so far. This... puts in question the credibility and strength of the EU process...
...Let us not undo the great strides forward we have achieved together by prematurely reopening hard-won laws.
[The full letter including list of signatories is available for download above.]