EU Omnibus Package: Key Changes in Sustainability for Spanish Companies

Rationalization of Sustainability Reporting: A Boost for Business Competitiveness

With its proposal, the European Commission takes a step forward in the search for a balance between the ambition of sustainability and the need for business competitiveness. This initiative focuses on simplifying sustainability reporting requirements, a crucial aspect for companies, especially SMEs.

Key Aspects of the Proposal

• Reducing the Administrative Burden: The proposal seeks to reduce the complexity and duplication of reporting requirements, alleviating the administrative burden faced by companies.
• Focus on Relevance: A more materiality-focused approach is promoted, ensuring that companies focus on sustainability information that is truly relevant to their operations and stakeholders.
• Clarity and Comparability: The proposal seeks to improve the clarity and comparability of sustainability information, facilitating informed decision-making by investors and other market actors.
• Adaptation to SMEs: Special attention is paid to the needs of SMEs, recognizing their fundamental role in the European economy and seeking to adapt reporting requirements to their capacity and resources.

Impact on Spanish Companies

• Improved Competitiveness: Simplifying sustainability reporting can reduce costs and complexity for Spanish companies, improving their competitiveness in the global market.
• Facilitating Access to Finance: Clearer and more comparable sustainability information can facilitate companies’ access to sustainable finance, an increasingly important aspect for investors.
• Strengthening of Reputation: Transparency and relevance in sustainability reporting can strengthen the reputation of Spanish companies, generating trust among their customers and other stakeholders.

The European Commission has presented the “Omnibus Package” with the aim of simplifying and harmonizing corporate sustainability regulations in the European Union. This package introduces significant modifications in four key areas: the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy Regulation and the Carbon Border Adjustment Mechanism (CBAM).

1. Corporate Sustainability Reporting Directive (CSRD)

• Reduction of scope: The number of companies obliged is significantly reduced, excluding 80% of those initially affected.
• Deadline postponement: The start date for mandatory reporting is postponed until 2028.
• Flexibility for SMEs: The administrative burden on small and medium-sized enterprises is reduced.
• Simplification of standards: Information requirements are revised and reduced to make them more accessible.
• Review of sectoral standards: The development of new sector-specific requirements is suspended.

2. Corporate Sustainability Due Diligence Directive (CSDDD)

• Limited focus on the supply chain: The obligation to monitor the entire value chain is reduced, focusing on direct suppliers.
• Frequency of assessments: Risk assessments will be carried out every five years instead of annually.
• Suspension of contracts: The management of non-compliance is made more flexible, allowing for the temporary suspension of commercial relations.
• Deferral of implementation: Entry into force is delayed until mid-2028.

3. EU Taxonomy Regulation

• Reduction of the scope of information: The number of companies required to report on taxonomy alignment is reduced.
• Simplification of criteria: Flexibility is introduced in the classification of sustainable activities.
• Financial materiality threshold: It is permitted to omit information that is not material from a financial point of view.
• Simplification of technical criteria: The criteria related to pollution prevention and control are revised and simplified.
• Exclusion of loans to SMEs: These loans are eliminated from the Green Asset Ratio (GAR).
• Review of “Do No Significant Harm” (DNSH) criteria: Elimination or simplification is proposed.

4. Carbon Border Adjustment Mechanism (CBAM)

• 91% reduction of importers subject to CBAM: 99% of emissions are kept under control.
• New exemption threshold: Occasional importers of less than 50 tons of CBAM products per year are exempted.
• Elimination of products with a low carbon footprint: Uncalcined clays are excluded from the scope of CBAM.
• Facilitation of procedures for large importers: Conditions for the use of default emission values are eliminated, the determination of default values is adjusted, consultation between national authorities is optional and the figure of the “CBAM representative” is introduced.

Implications for Spanish Companies

• Relief of the administrative burden: The reduction of the scope and the simplification of the standards decrease the burden on companies.
• Greater flexibility and adaptation time: The postponement of deadlines and the introduction of exemption thresholds provide more time to adapt to the new requirements.
• Focus on materiality: A more focused approach to relevant and material information for each company is promoted.
• Opportunity for transition: The simplification of technical criteria and the exclusion of certain products facilitate the transition to more sustainable practices.

The “Omnibus Package” represents a significant change in EU sustainability regulations, with important implications for Spanish companies. The simplification and harmonization of the regulations seek to balance the ambition of sustainability with the need for business competitiveness, facilitating the transition to a greener and more sustainable economy.

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Sustainability Due Diligence Directive: Keys and Challenges for Companies in Spain