Big changes from the EU Sustainability Omnibus: What SMEs can expect
What is the Sustainability Omnibus?
As part of the Green Deal, the EU passed many new laws and regulations, especially on sustainability reporting. These created many burdens on businesses, which the EU is now re-evaluating as part of a far reaching Sustainability Omnibus. This proposed regulation would reduce the scope of:
How does the scope of the CSRD, CSDDD, and EU Taxonomy change?
The Omnibus package intends to directly reduce the impact on SMEs:
The Corporate Sustainability Reporting Directive (CSRD) would directly exclude SMEs - and only apply to businesses with more than 750 employees
Now the Corporate Sustainability Due Diligence Directive (CSDDD) extends deep into supply chains - the omnibus proposes to limit this liability for very large companies to direct suppliers and customers only
For large companies, data points on the EU Taxonomy for Sustainable Finance are reduced. However, the detailed requirements for demonstrating sustainability of specific technologies remains unchanged.
How will Green Deal laws impact SMEs after the Omnibus?
The omnibus, if it passes, would remove many direct requirements for sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD).
However, SMEs with very large customers can still feel an impact. These large customers have the same requirements, and may need to report information from their supply chain - which can include SMEs. For example:
Large customers may ask for carbon or greenhouse gas (GHG) emissions from supply chain to report on scope III emissions for the Corporate Sustainability Reporting Directive (CSRD)
Large banks may require detailed information when SMEs apply for loans under the EU Taxonomy for Sustainable Finance
Importantly, many large businesses have retained voluntary committments and reporting such as Ecovadis or Morningstar Sustainalytics ratings. This means that large businesses may continue asking your SME for data, and potentially selecting suppliers based on sustainability performance.
Ready for the next step?
While the scope of the CSRD, CSDDD, and the EU Taxonomy now directly excludes SMEs, requirements can still come via large customers or bank lenders who remain in scope. This means there are still opportunities to create value, and potential risks for SMEs.
Ready to create value for your business? Contact us to get started.
