EU’s New Initiative to Simplify ESG Reporting
Overview
On November 8, 2024, European Commission President Ursula von der Leyen announced a groundbreaking initiative to consolidate various ESG reporting obligations into a single regulation. This move follows the Budapest Declaration, which emphasized the need for a "simplification revolution" to create a clear, simple, and smart regulatory framework in the EU.
Consolidation of Obligations
The European Commission plans to merge the Corporate Sustainability Reporting Directive (CSRD), the EU Taxonomy Regulation, and the Corporate Sustainability Due Diligence Directive (CS3D) into one comprehensive regulation. This consolidation aims to reduce the regulatory burden on companies without significantly altering the substantive obligations
Goals and Expectations
The Council of the European Union has called for a 25% reduction in reporting requirements by the first half of 2025. This ambitious target is part of a broader effort to enhance the EU's competitiveness by simplifying compliance and reducing administrative costs
Impact on Competitiveness
Former European Central Bank President Mario Draghi's "Future of European Competitiveness" report highlighted the need for a 25% reduction in reporting obligations. The report also recommended a revamped competitiveness test for new proposals, which the Council endorsed in the Budapest Declaration. This initiative is expected to facilitate cross-border trade, innovation, and investment, making the EU more competitive on the global stage.
The EU's plan to streamline ESG reporting frameworks represents a significant step towards reducing regulatory complexity. While the proposal is still in its early stages, it is seen as a welcome change for companies dealing with overlapping and complex regulations. This initiative underscores the EU's commitment to creating a more efficient and competitive regulatory environment.
Read the full report here:
https://www.skadden.com/insights/publications/2024/11/eu-seeks-to-simplify-esg-reporting-obligations
