Simplify Multiple Sustainable Regulations
European Commission releases a proposal aimed at simplifying multiple sustainable regulations, reducing the burden of corporate information disclosure, and enhancing EU business competitiveness while achieving sustainable development goals.
European Commission believes that the new proposal will save 6.3 billion EUR in administrative costs annually and release an additional 50 billion EUR in public and private investment to support the priority of sustainable regulatory policies. The regulations involved in this proposal include the Corporate Sustainability Reporting Directive (CSRD), EU Taxonomy, Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Carbon Border Adjustment Mechanism.
Related Post: International Capital Market Association Releases Recommendations on EU Sustainable Finance Regulations
Adjustment to Sustainable Disclosure
The EU plans to revise the Corporate Sustainability Reporting Directive and the EU Taxonomy to optimize corporate sustainability information disclosure. These modifications include:
Corporate Sustainability Reporting Directive
- Reduce the scope of enterprises involved in the directive (retaining 20%) and focus on enterprises that have the greatest impact on sustainable issues. At present, the threshold for enterprises involved in the directive is 250 employees, and after modification, this threshold will be raised to 1000 employees. The total balance sheet amount (25 million EUR) and net turnover (50 million EUR) remain unchanged.
- Ensure that the information disclosure requirements of large enterprises do not impose a burden on small and medium-sized enterprises in the value chain.
- Delay the requirement to disclose information in 2026 and 2027 until 2028.
EU Taxonomy
- Narrow down the scope of enterprises involved in the Taxonomy (consistent with the Corporate Sustainability Due Diligence Directive).
- Add activities that are partially consistent with Taxonomy to expand enterprise transition financing.
- Simplify 70% of disclosure data points and add a financial materiality threshold (10%).
- Simplify the Do no significant harm (DNSH) standard.
Adjustment to Sustainable Due Diligence
The EU plans to revise the Corporate Sustainability Due Diligence Directive to support responsible business practices. These modifications include:
Corporate Sustainability Due Diligence Directive
- Narrow down the scope of due diligence and change the regular evaluation of partners from once a year to once every five years.
- Reduce the disclosure of value chain information by large enterprises, thereby reducing the burden on small and medium-sized enterprises.
- Strengthen due diligence coordination and provide a fair environment within the European Union.
- Cancel civil liability conditions to avoid excessive compensation by enterprises.
- Postpone the disclosure deadline for large enterprises by one year to July 2028.
Adjustment to Fair Trade
EU plans to modify Carbon Border Adjustment Mechanism to achieve fair trade. These modifications include:
Carbon Border Adjustment Mechanism
- Exempt small importers from reporting obligations and retain 99% of carbon emissions coverage.
- Simplify the emission calculation, information disclosure, and financial responsibility.
- Strengthen the mechanism rules to ensure long-term effectiveness.
- Release new proposals in 2026 to further simplify the mechanism.
Adjustment to Investment Plan
In addition to simplifying sustainable regulatory policies, the EU will also optimize green investment programs, including InvestEU. These modifications include:
- Use InvestEU investment returns for reinvestment, expected to increase the investment by 50 billion EUR.
- Simplify investment process costs, expected to save 350 million EUR in compliance costs.
- Strengthen cooperation among member countries under investment plans to support their enterprises.
Reference:
Commission Simplifies Rules on Sustainability and EU Investments
