And away we go… Responsible Investor reported that at least some of the more dire predictions about the EU Omnibus, CSRD and CS3D could become reality:
“… two sources have told RI that the Omnibus proposal scheduled to be delivered by executive vice-president Stéphane Séjourné and Commission president Ursula von der Leyen on 26 February will likely be pushed to March. RI understands that the Commission is expected to re-open both CSRD and CSDDD at Level 1.
For the CSRD, the Commission is expected to align the regulation’s scope with CSDDD, meaning that companies with less than 1,000 employees will no longer be required to report under the regulation. One source said this would mean around 85 percent of companies currently covered by the regulation will no longer be in scope.
RI understands that the double materiality aspect of CSRD is also at risk, and that there may be a re-focus on single (financial) materiality instead, which may require the European Sustainability Reporting Standards (ESRS) to be re-written.
Meanwhile, 11 points of the CSDDD will be re-discussed, including climate transition plans and liabilities, sources told RI.“
You’ve read some of that before, but reopening double materiality is unexpected. Tension between financial materiality and double materiality in EU and related regimes goes back several years. This latest possible turn stands in contrast the EU’s position only two years ago when European regulators stressed the importance of impact materiality to investors and urged ESMA to consider moving to a double materiality standard for its ISSB reporting frameworks.
But the wheels have turned since then.
So what to do? Many companies have invested significant time and resources into CSRD compliance – is that wasted effort? Not by a long shot in my opinion. First, CSRD reporting of some form will be required. A delay (should that happen) would be beneficial for companies to really tighten up and verify associated data, commitments, targets, goals and strategies for the ultimate reporting deadline. Second, you can still use the data to analyze company operations and take actions on the Impacts, Risks and Opportunities (IROs) to create business value/ROI on the time, effort and expense incurred. Don’t view regulatory bumps along the road as fatal.
Members can learn more about CSRD and disclosing ESG generally here.
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