EU omnibus regulation is a ‘massive step backwards’ says sustainability expert

The EU omnibus regulation is “a massive step backwards” on its work around sustainability reporting measures, a leading sustainability policy analyst has said.

“This is reactive to certain changes in the global economy that they think potentially will have short-term benefits, but actually will just set us backwards,” Richard Gardiner, public policy lead at the World Benchmarking Alliance, said during an interview for the new Sustainability Omnibus Podcast.

Listen to the full interview and subscribe on Apple, Spotify or wherever you get your podcasts.

The EU sustainability omnibus proposal drastically waters down the corporate sustainability reporting directive (CSRD), corporate sustainability due diligence directive (CSDDD) and EU taxonomy. These sustainability reporting rules were designed to make reporting and mitigating climate change risks more mainstream. Experts are concerned the changes could lead to a decrease in transparency and hinder the bloc’s efforts to transition to a green economy.

The information in the EU’s sustainability reporting rules are important not just for investors, but central bankers and regulators as well.

The EU is a heavy bank-lending market, said Gardiner, and there’s a need for banks to address their climate risks. Financial institutions are positioned to talk and engage with customers. The EU’s reporting rules are not about moving away from investments, but about disclosing and understanding risk, he added.

“Banks in particular have huge leverage over those they lend to, and can really engage with [clients] to ask them questions and understand what the companies are doing”.

As the European economy faces pressure and the political tide has turned to the right, the European Commission says these regulations need to be streamlined in order for the EU to remain competitive amid a changing geopolitical environment.

But there’s no evidence the omnibus proposal would actually help the bloc compete, said Gardiner.

“We’ve seen no evidence that removing a certain amount of reporting requirements or potentially reducing the amount of risks you have to look at in your supply chain are going to massively change the competitive advantage of companies operating in the EU.”

Listen to Green Central Banking’s limited podcast series The Sustainability Omnibus Podcast to learn more about the complex nuances of the EU simplification agenda on sustainable reporting, Available now on Apple, Spotify and all major podcast platforms.