There is no shortage of good proposals. Some call for postponing the launch of the EU Corporate Sustainability Reporting Directive (CSRD), while others want the number of data points to be halved. Some advocate for more leniency in the reporting obligations for SMEs, and others want the complete abolition of the Green Asset Ratio. And there are demands for that companies will only need to report data to one entity, or that the EU will lift electronic labeling requirements.

There are plenty of other ideas on how EU lawmakers could reduce the bureaucratic burden associated with non-financial reporting, which includes information about the climate footprint of companies and banks. The current heated debate in Brussels – among the most fervent on any issue – is largely attributed to EU Commission President Ursula von der Leyen. Shortly after the new EU Commission took office in late autumn, she made a very ambitious announcement: On February 26, within the first 100 days of the „von der Leyen II“ Commission, she would present an „Omnibus Package“ – a collective law aiming for „unprecedented simplification“ of EU rules.

In the „Competitiveness Compass“ – a roadmap for more growth and innovation in Europe – the EU Commission has now outlined the main initiatives, and also included timelines for when they should be finalised, and provides indications of where things are headed.

One example: the „AI Factories“ initiative aims to leverage all network effects at the European level and, building on the high-performance computing network, increase computing power by the end of 2025. These capacities are intended to be made accessible to startups, researchers, and the industry, allowing them to train AI models more effectively using this infrastructure.

The EU Commission has also given a preview of its efforts to reduce bureaucracy. In the future, political objectives should be achieved in „the simplest way“, with clear focus and minimal effort. The Omnibus Regulation proposes a „far-reaching“ simplification of three key laws related to non-financial reporting: the Taxonomy, the Supply Chain Act, and the Corporate Sustainability Reporting Directive (CSRD). The announcement states that „the required data will be closely aligned with the needs of investors“, deadlines will be set with appropriate flexibility, and the focus will be on the most harmful activities.

The reporting obligations should concern financial metrics that do not discourage investments in small businesses. Additionally, the EU Commission promises to adhere to the principle of proportionality: obligations will be proportionate to the scope of a company’s activities. Furthermore, „a new definition of small and medium-sized enterprises (SMEs) will be proposed“, encompassing companies that are larger than SMEs, but smaller than large corporations. This will allow 31,000 companies to"benefit from a tailored simplification of regulations similar to that for SMEs."

Diplomats report that fierce debates have now broken out. First, within the EU Commission itself, where different Directorates-General are working on the proposals. Of particular interest in Brussels is how much the Spanish Vice President Teresa Ribera will be willing to make cuts to sustainability requirements, given that she is responsible for „a clean, fair, and competitive transition of the economy.“

Controversies are also expected in the EU Parliament. Left-wing EU Member of Parliament Martin Schirdewan criticises the „Omnibus“ plans, saying that "the talk of reducing bureaucracy is just a pretext to once again promote the interests of large shareholders at the expense of workers and the environment.“ He argues that the back-and-forth on reporting obligations leads to more legal uncertainty and incurs high costs. The Greens have also expressed reservations about diluting certain reporting obligations, according to EU officials and diplomats.

There is likely to be a lot of discussion in the Council, as member states have differing interests. For example, the French government has summarised its wishes for the Omnibus Package in a 22-page working paper. Among the demands is a delay in the implementation of the CSRD and an „indefinite“ postponement of the launch of the supply chain law (Corporate Sustainability Due Diligence Directive –CSDDD). The indefinite delay is intended to allow for a revision of certain provisions of the law, such as its scope and threshold values.

Lastly, those preparing the Omnibus regulation expect strong opposition from organised interest groups. In this case, lobbyists from banks, investment funds, and other financial services providers are likely to be sympathetic to the EU Commission's proposals. However, politicians report that representatives of companies that benefit from regulation – such as auditors, consultants, and lawyers who gain consulting mandates from European rules – are vehemently opposing the proposals.