Omnibus eases regulation

 The EU has set several directives to guide companies towards sustainable development. The most recent one, the Corporate Sustainability Reporting Directive (CSRD), focuses on climate change and human rights.

In Finland, the directive was recorded in the Accounting Act in December 2023, and a standard specifying the requirements of the directive was published at the beginning of 2024. The largest listed companies, subject to the reporting obligation in the first phase, started preparations rapidly and published their sustainability information accordingly during the spring and winter.

The demands of the CSRD and the ESRS raised criticism of the stringent EU regulation. Sustainability reporting, the EU taxonomy, and the Corporate Sustainability Reporting Directive pose a considerable financial and administrative burden for companies, which may reduce the efforts to promote sustainable development. Small and medium-sized companies, in particular, have felt that detailed reporting in accordance with the standard is an unreasonable requirement that does not provide sufficient added value to the company’s business.

To lighten regulation, EU published the Omnibus proposal at the end of February. It includes significant changes to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy. The changes must be approved by the European Parliament and the European Council, but it can be assumed that the regulation will be significantly softened. Companies in the SME sector have already been given a two-year extension to prepare for sustainability reporting.

The situation confuses many companies, as the new regulation is being changed significantly. So, what should be done? It is appropriate to quote Väinö Linna’s The Unknown Soldier and Lieutenant Autio’s instructions. “You can’t lie in the fire!” Although reporting regulation is being relaxed, the work to slow down climate change and promote sustainable development must be accelerated. Finnish companies see sustainable development as a key driver of competitiveness and a foundation for future success. It is clear that companies must adapt their business operations to our planet’s carrying capacity and resources. Let’s hope that the resources reserved for sustainability reporting will now be used to develop more sustainable businesses.