Less red tape and less sustainability: EU Omnibus package for an extra 50 billion

Brussels – “This simplification agenda is not about deregulation,” Economy Commissioner Valdis Dombrovskis clarifies. At first glance, the EU Commission’s Omnibus package, unveiled today (Feb. 26), paves the way for an unrestrained and, therefore, an unregulated way of doing business. Reducing reporting requirements and frequency are the keys to boosting EU competitiveness and making Europe business- and investment-friendly. This is the path mapped out in the von der Leyen team’s strategy.

However, Dombrovskis insists that “less bureaucracy means more competitiveness and more investment.” In that sense, “Reducing unnecessarily complex EU rules is a vital part of our plan to make Europe more competitive” through less wasted time, fewer administrative costs, and savings useful for investment. 

The Commission estimates that if adopted and implemented as proposed, the legislative changes would lead to total savings on annual administrative costs of about 6.3 billion euros and mobilize an additional 50 billion euros of public and private investment capacity to support policy priorities.

Alignment on sustainability

It is achievable by removing about 80 percent of companies from the scope of the directive on Corporate Sustainability Reporting to focus on the largest companies with the greatest impact on the environment and society. There is also the proposal to reduce the reporting burden of taxonomy – the set of activities considered sustainable – by decreasing the reporting models by about 70 percent .

There will also be a relaxation of rules on due diligence – the proper ethical-moral behavior of businesses to measure the social sustainability of the finished and sold product. Here, the idea is to simplify sustainability requirements so that affected companies avoid unnecessary complexity and cost, for example, by focusing systematic due diligence requirements on direct business partners and reducing the frequency of periodic assessments and partner monitoring from annual to five years, with ad hoc assessments where necessary.

The Commission will now have to negotiate with the EU Council, and Parliament proposed amendments to the regulation for the CBAM, the Corporate Sustainability Directive, and the Corporate Sustainability Reporting Directive. Only then can the Commission’s intentions become reality and produce those estimated benefits. The path is not a foregone conclusion since Socialists have already said they would not accept backtracking on the Green Deal or deregulation.

Maria Luís Albuquerque, commissioner for Financial Services, tries to reassure that with the Omnibus package, “We are defining a path towards a more growth-friendly, more usable and proportionate EU sustainable finance rules. By facilitating a more conducive business environment, we can drive growth and EU’s competitiveness, attract investments, and continue to deliver on our Green Deal objectives.”