Thursday, November 13, European lawmakers voted on the proposed Omnibus texts. Some political parties formed an alliance and agreed to exempt even more companies from sustainability reporting rules than initially foreseen in the first Omnibus proposal released in February.
The Parliament will now enter negotiations with the Council and the Commission to finalize the legislation.
What the Omnibus vote changes for businesses
With a new threshold of 1,750 employees and €450 million in revenue, 92% of the companies originally falling under the CSRD scope would now be exempt from reporting.
In addition, due diligence obligations would apply only to very large EU and non-EU corporations. Transition plans would not be required, and companies would face liability only at the national level, not across the EU.
A sad day for Europe now that it is backing away from its original commitments and this under the pretext of economic viability. Strange.
While Europe is eliminating a competitive advantage of a long-term sustainable economy, a lot of non-European regions are making the opposite movement. These regions just started to discover the value of it.
Let’s be clear. Sustainability is not about political maneuvering or lobbying; and the climate crisis is not an ideology. Sustainability is about leadership and innovation, about what consumers want. Economic viability is not an enemy of a well-designed sustainability strategy or any innovation initiative.
Climate risks do not disappear by looking the other way
What to Expect in the Coming Years
A sustainability rebound is unavoidable. Climate risks don’t disappear by putting your head in the sand. Deregulating the reporting efforts will not eliminate the harm companies can cause. Deregulation is simply an easy political win in a moment of pushback.
Refining the original framework was justified. Some requirements went too far and were difficult to achieve. But dismantling the framework and reducing the scope to 8% of European companies is far from smart policy. Transparency and accountability should not come as an option. Transparent public data are key to making sustainability efforts effective.
The green transition is a strategic transition. Innovation and new technology are the foundation of future-proof business models. Sustainability R&D is nothing different and follows the same path. ESG is a catalyst for innovation, aligned with what consumers expect. Forward-thinking companies are already building resilience, investor confidence and brand value through a focused ESG strategy and transparent sustainability reporting. And they will continue to do so. With or without the European Parliament.
Transparency and accountability should never be optional
From shareholder value to stakeholder value?
Not shareholders, and not lawmakers, but stakeholders will ultimately determine how the market deals with sustainability.
The Omnibus vote postpones, dilutes, or even abandons what used to be the key pillars of the EU’s sustainability strategy under the pretext of cost savings, opening the door to the continuation of unsustainable practices. Yet it is a company’s stakeholders who will hold clients, suppliers, and investees accountable for ethical and sustainable behavior. The familiar notion of shareholder value should not differ fundamentally from stakeholder value, certainly not stand in opposition to it.
Although I am concerned that populist narratives are denying facts and dismissing science-based evidence, I remain confident that common sense will prevail, and that genuine leadership and ownership will outpace the current political pushbacks in Europe.
Read more
- The Omnibus reversal: an unsustainable step backward in ESG policy
- Simpler rules ahead for sustainability reporting
- The forgotten 'S' in ESG. Social sustainability as a strategic lever.
- De Omnibusbocht: een weinig duurzame stap terug in de tijd (Dutch - original Trends magazine version)
- How do Belgian organizations handle carbon accounting?
- Europe's Green Deal turns pale
