On February 26th, the European Commission (EC) published a legislative proposal to significantly amend recently adopted sustainability regulations: the Omnibus simplification package. This proposal was put forward by the EC and will require adoption by the European Council and the European Parliament, before changes are also implemented by EU member states.
The EC has requested a ‘fast track’ for the proposal on delaying the CSRD reporting obligation by 2 years and the CSDDD transposition deadline and reporting obligation by 1 year, however it remains unclear how soon this proposal can be adopted by the European Council and Parliament.
Want to know more about the details of the Omnibus Proposal?
The amendments in the legislative proposal seem to be intended to provide administrative relief for companies. It should become less complex and time-consuming for companies to comply with sustainability legislation. This creates space for companies to think more independently and strategically about their sustainability ambitions and report on them. The focus shifts more towards purpose rather than complex, mandatory reporting.
Organisations can use the extra time to continue working on further developing or updating their sustainability strategy and the ambitions that underlie the reports. We know from experience that it can take multiple reporting periods to effectively organise processes and systems for data collection on sustainability indicators as well as to ensure the quality of sustainability information. It is therefore useful to involve the auditor in the preparatory steps, such as discussing the double materiality analysis (DMA). The reliability of reporting increases when the figures have been audited. Ultimately, the goal is to inform relevant stakeholders so they can make decisions with confidence, which in turn contributes to the company's value creation.
For organisations that had not yet started preparing you are presented with an opportunity to pay extra attention to advancing sustainability plans in a potentially less complex reporting landscape. This will allow focus and investment in sustainability strategy, and ensuring you can align your reporting frameworks to stakeholder needs.
In the recent period supporting organisations on the implementation of these sustainability guidelines, we have learned a number of important lessons which can be used to keep sustainability and transparency on the agenda.
We see that different groups of companies, depending on their size and how far they have progressed with their preparations, have different considerations about what the best approach is now or what next steps make sense. In this overview, we have listed the scenarios and considerations per group and provide recommendations about the opportunities and further work on the sustainability strategy and reporting. We also list the developments and opportunities that we see in the field of assurance in sustainability information and reporting.
Would you like to know what we recommend for your company?
The experts at Impact House by Grant Thornton Netherlands have been supporting organisations in the field of sustainability and impact for more than 20 years. We do this because we believe it is important for organisations to understand where key sustainability risks and opportunities lie, and because we are passionate about helping them enhance their positive societal impact. Over the years, we have seen numerous sustainability reporting standards and frameworks for broad value management emerge.
Our auditors not only verify sustainability reports but are also involved in auditing specific sustainability KPIs (such as CO2 emissions). Stakeholders in the value chain may also request assurance on specific data points. For these types of engagements, audit standards are available in the Netherlands. Our auditors are happy to support you. It’s a great starting point for the journey towards a comprehensive sustainability report.
What is important to remember is that these sustainability guidelines are primarily intended as a means and not as an end. The CSRD, CSDDD and EU Taxonomy have already helped to develop a common standard and new norm for transparency and offer good tools that can help organisations keep track of their own impacts, risks and opportunities. These tools remain relevant and useful.
The Omnibus proposal clearly states that Europe remains committed to the ambitious goals of the Green Deal, which means that organisations must continue to prepare for a transition to a sustainable economy. This is also captured in the sustainable growth agenda the EC is pursuing. The increasing climate risks for organisations are not disappearing with a change in legislation.
In recent times, many organisations have worked with us to take important steps towards implementing CSRD, CSDDD and EU Taxonomy. These are guidelines intended to make sustainability efforts more transparent and to get organisations moving in the development of their own sustainability strategies.
This desire is also driven in part by the financial sector, which needs to know whether the organisations they are investing in are sufficiently aware of their sustainability risks and opportunities and are also taking steps to reduce negative impact. This type of information can still be requested by financial institutions.
Compliance is not the only reason to work towards future-proof business practices and a sustainable strategy. A large group of Dutch organisations have called for maintaining sustainability legislation, as they recognize that these guidelines support responsible business practices and help their organisations prepare for the future. A perspective we are fully aligned with.
If you have any questions about the content of these changes and what the best next steps are for your organisation, please contact us.
