"Simplification Promised, Uncertainty Delivered"

How the EU Omnibus Packages Roll Back the Green Deal

[...] This blog post will concentrate on the changes proposed in the field of sustainability reporting in the Corporate Sustainability Reporting Directive (CSRD) – one of the most criticized “bureaucracy monsters”. Since this EU directive has already become domestic law in 19 of the 27 EU Member States, the Omnibus Packages now impose substantial uncertainty on companies. [...]

Imposing uncertainty

The Omnibus Packages are substantially altering the Green Deal instruments. With view to the CSRD, the Commission has announced a revision of the delegated act establishing the ESRS, with the aim of substantially reducing the number of data points. Additionally, between 75-82% of companies in scope of the CSRD will fall out of scope, as the employee threshold will be raised to 1,000 employees. Furthermore, for companies due to report in 2026 and 2027, the start for reporting will be pushed back by two years.

With view to the original timeline, it becomes evident that the Omnibus Packages, at this point, bring major legal uncertainty. The deadline for national transposition has passed mid-2024, most Member States have transposed the law and the period for reporting has, for part of the in-scope companies, already begun. Should the Omnibus Packages be adopted, this would alter who has to report when and on what – impacting past and present reporting periods and confronting in-scope companies with impending changes on an unclear timeline.

Due to their uncertainty, these changes increase the bureaucratic burden on companies. Some which are already within scope will have to alter or take back newly built reporting structures. Others do not know if they soon will fall within scope, as this depends on the legislative process of the Omnibus Packages in Council and Parliament – at a time when the financial year of those who need to collect data has already begun. It is doubtful if this approach lives up to what Ursula von der Leyen claims to be “Simplification promised, simplification delivered!”.

A conditional green future

By shrinking the CSRD and other Green Deal instruments, the Omnibus Packages significantly impede the EU’s progress towards a just socio-ecological transformation. The Green Deal’s promise of a green future for Europe has become conditional upon whether going green is in line with the Commission’s new principal goal of competitiveness. While, at least in its newly announced “Clean Industrial Deal”, the Commission seemingly seeks to align the two, the Omnibus Packages suggest that primacy is given to an economic approach. The proposed cuts to Green Deal instruments are substantial while it appears, with view to the CSRD, at best speculative that revising the reporting standards, diminishing scope and delaying implementation will contribute to competitiveness of EU companies.

Most likely, the Council and Parliament will support the regulatory U-turn induced by the Omnibus Packages regardless. Some opposition is set to arise in Parliament as the European Greens stated they will not support “such a short-term, ill-considered back and forth”. As this is the minority, the Commission’s new prioritization of competitiveness is bound to soon take effect – at substantial cost to the urgently needed sustainability transformation to safeguard a livable future for all.