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EU aims to cut firms’ ESG reporting burden

Lawyers at Eversheds Sutherland have said that a European Commission plan to combine three key sets of EU rules for businesses into one law will be “no mean feat”.

The firm has highlighted indications from the EU body’s president Ursula von der Leyen earlier this month that the Corporate Sustainability Reporting Directive (CSRD), EU Taxonomy Regulation, and Corporate Sustainability Due Diligence Directive (CSDDD) would be combined into a single legal act, to be published next year.

The aim, according to von der Leyen, is to reduce companies' regulatory burden by limiting “often redundant, often overlapping” requirements.

In a note on the firm’s website, the Eversheds Sutherland lawyers say that the development is in line with the recently published Budapest Declaration, in which EU leaders set out 12 points to boost competitiveness – including a reduction in reporting requirements for businesses.

‘Overlapping’ requirements

The lawyers say that von der Leyen has confirmed that the intention is to maintain “the content of the law”, with the focus on changing overlapping or incoherent requirements and removing redundant data points that do not support compliance with the frameworks’ objectives.

“Although the legislation in force has been drafted intending to complement and acknowledge each other’s requirements, this exercise will require a strategic overview of all reporting requirements to ensure there is an aligned set of questions prompting a simplified data submission process,” Eversheds Sutherland says.

Its lawyers add that it is difficult to assess how quick or successful this undertaking will be.

Approval needed

They point out that the commission will need to take the proposals to the EU Council and European Parliament for approval.

“The speed of this process will depend upon whether any party also wants to debate a change to the regulatory requirements to address any issues arising as a result of implementation of the current laws to date,” the lawyers add.

Now, affected organisations will be complying with the taxonomy rules and CSRD, while preparing for the due diligence requirements of CSDDD.

Eversheds Sutherland says there should be no change in compliance with these laws, but it urges firms to look at addressing ESG issues in a “holistic” way, so that their policies can be easily adapted to any future changes in law.