The European Union is getting serious about simplifying sustainability regulation. With the so-called omnibus procedure, the EU Commission is planning a major streamlining of the complex ESG reporting that has been a major challenge for companies for years.
So what is the omnibus procedure?
When you hear the term ‘omnibus’, the first thing that comes to mind is a bus that transports many passengers simultaneously. The so-called omnibus procedure works similarly in legislation: several pieces of legislation are ‘taken along’ and revised in parallel, rather than being dealt with individually. The aim is to replace multiple time-consuming procedures and bring complex legislation together in a single step.
The omnibus procedure is a legislative approach whereby several laws or regulations are revised or merged at the same time in order to reduce complexity for businesses, while maintaining the essential objectives of the original legislation.
Particularly in the European Union, where numerous directives and regulations apply simultaneously and interlock, the omnibus procedure offers the opportunity to identify overlapping or redundant content, merge it and thus make it more efficient. The omnibus procedure is currently particularly relevant in the context of EU sustainability regulation – for example, about environmental, social and governance (ESG) reporting requirements – where various legislative initiatives and regulatory packages are merged into a single draft to reduce administrative burdens and create clearer rules.
Rather than having to submit multiple documents and reports, companies will be relieved by such a bundled approach. This legislative approach aims to promote innovation and competitiveness without diluting the core content and objectives of the directives. Many individual steps become a common journey – similar to a bus where all passengers arrive at the same destination, only much simpler.
What is on the bus? In addition to the CSRD, the CSDDD and the EU taxonomy, the EU is considering other regulations.
Specifically, the reporting obligations under the CSR Directive, the EU Taxonomy and the Supply Chain Directive will be revised in such a way as to significantly reduce the burden on companies. The aim is to reduce the administrative burden by at least 25%. This is a real opportunity for business. Less red tape, more focus on concrete sustainability goals. Small and medium-sized enterprises in particular can breathe a sigh of relief as the administrative burden is reduced. The following sectors stand to benefit most from the changes to the omnibus procedure:
- the automotive industry: This sector is under great pressure in terms of environmental protection and CO2 emissions. Simplification of reporting requirements could be particularly helpful.
- public transport: Public transport faces major challenges and investment needs. Simplified rules could facilitate the implementation of modernisation measures.
- chemical and pharmaceutical industries: These sectors are heavily affected by environmental legislation. Streamlining reporting requirements could reduce the administrative burden.
- banking and insurance: The financial sector is heavily affected by ESG reporting requirements. Simplification could be particularly beneficial here.
- medium-sized companies: In general, small and medium-sized companies could benefit disproportionately from a reduction in red tape, as they often have fewer resources for complex reporting.
The overarching process must aim to simplify reporting requirements without watering down the core objectives of sustainability legislation. A balance needs to be struck between economic efficiency and climate protection. The EU is facing a balancing act – and the business community is eagerly awaiting the concrete proposals. The real impact will only become clear once the EU Commission’s concrete proposals are available.
Title Photo by freepik
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