The European Commission proposed far-reaching adjustments to sustainability and supply chain regulations in its ‘Simplification Omnibus’ yesterday. The aim is to reduce bureaucracy and relieve the burden on companies – with savings of up to 6.3 billion euros. Planned changes include reduced reporting requirements, eased liability rules and delayed implementation. For Switzerland, the reform has consequences as well.
The European Commission has presented a comprehensive reform package called ‘Simplification Omnibus’. The aim of this omnibus proposal is to bundle and simplify existing regulations in the area of sustainability – in particular reporting and supply chain regulations. These guidelines are part of the ‘Green Deal’. This started out as an ambitious sustainability project, but became a bureaucratic nightmare. The abundance of regulations and the multitude of data points required pushed numerous companies to their limits. This approach to regulation has therefore been increasingly criticised, particularly by Mario Draghi in his report on strengthening the EU’s competitiveness, as well as by business associations in major industrialised countries. According to Commission estimates, the new measures could now relieve the economy of 6.3 billion euros in administrative costs.
A return to reason
One key change concerns the EU’s Corporate Sustainability Reporting Directive (CSRD). The European Commission has proposed a drastic reduction in the number of companies required to report. Only 20 per cent of the companies originally affected will still have to continue providing sustainability reports. In addition, the number of data points to be reported is to be reduced and the requirements for the external auditing of companies’ sustainability reports are to be eased.
The Corporate Sustainability Due Diligence Directive (CSDDD) is also undergoing significant changes. These include, for example, a restriction of the scope of the due diligence. For example, only direct suppliers would now have to be included in the risk analysis, and not the entire supply chain as before. Provisions on civil liability have been completely dispensed with and the fine system has been made more proportionate. Implementation of the CSDDD has also been postponed by a year. From 2029, the directive would then only apply to companies with more than 1,000 employees and a global net annual turnover of more than €450 million.
Further simplifications are planned for the Taxonomy Regulation and the Carbon Border Adjustment Mechanism. This Omnibus Package must now pass through the legislative process. The European Parliament and the Council of the European Union must agree on a final draft before the new regulations can be transposed into national law. Until then, the European Commission has temporarily suspended the obligations for EU member states to implement the CSRD and CSDDD.
Omnibus and the consequences for Switzerland
In Switzerland, regulations on human rights and environmental due diligence and transparency were introduced as part of the indirect counter-proposal to the Responsible Business Initiative. Taking into account the changes in the Omnibus package, Swiss regulation is in line with the EU approach and even goes further in the area of child labour. The Federal Council has been considering a further development of these rules for some time. In October 2023, for example, it conducted a consultation on the extension of reporting requirements. However, the new Responsible Business Initiative is already outdated before it is submitted, as it is closely aligned with the original version of the CSDDD, which is now being revised by the Omnibus Regulation.
The goal of ensuring that sustainability remains broadly anchored in the economy remains undisputed. However, SwissHoldings pleads for waiting for the ongoing review process at the EU level before final decisions are made in Switzerland on the further development of its own rules. A ‘Swiss Finish’ would place an unnecessary burden on Swiss companies and put them at a disadvantage in international competition. What is crucial is a practical regulation that promotes sustainable development without overburdening companies. Otherwise, there is a risk of withdrawal from difficult markets or the breakdown of business relationships – the opposite of what is intended.
Contact
Denise Laufer | Head Economics & Member of the Executive Committee | +41 (0)76 407 02 48
