- Small and mid-sized businesses could soon be exempt from reporting the climate impact of their activities following proposed changes to the EU’s sustainability reporting rules announced this week.
Part of the EU’s previously announced ‘Omnibus’ simplification package, the European Commission on Wednesday detailed proposed changes to its recently-introduced Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
This includes drastically reducing the CSRD’s scope by removing reporting requirements for 80 per cent of companies. The change would restrict the mandate to only large EU-based companies with more than 1,000 employees (and with either a balance sheet in excess of €25 million or turnover above €50 million). These companies will be required to report against the European Sustainability Reporting Standards (ESRS), however these standards will also be revised and simplified.
Large organisations with less than 1,000 employees (which, under the directive’s current scope, are due to begin annual reporting either in 2025 or 2026) as well as SMEs (due to report in 2027) would therefore be exempt from annual reporting obligations. For these companies, the commission said it will instead propose a simplified voluntary reporting standard.
The CSRD’s revised threshold, the EU said, would focus the directive on “the largest companies which are more likely to have the biggest impacts on people and the environment”.
Other proposed changes to the CSRD include:
- Revising the ESRS “with the aim of substantially reducing the number of data points, clarifying provisions deemed unclear, improving consistency with other pieces of legislation and reducing the number of data points”. Currently, scope 3.6 emissions related to business travel are among the data points required in annual reporting. It is unclear whether this will be removed.
- Sector-specific standards will be abandoned.
- The requirement to provide reasonable assurance will be removed, with only ‘limited’ assurance deemed necessary.
- Postponing by two years (until 2028) the reporting requirements for companies currently in the scope of CSRD and which are required to report as of 2026 or 2027 in order to give co-legislators time to agree to the Commission’s proposed changes.
With reference to the CSDDD, the EU has also proposed to reduce annual reporting to once every five years. Compliance deadlines for the largest companies will also be postponed by one year (to 26 July 2028).
The Omnibus changes will undoubtedly reduce the administrative burden on businesses, but may also slow down progress towards emissions reduction goals.
The Global Business Travel Association (GBTA) also expressed concerns the EU’s simplification push will be interpreted by businesses “as a license to slow down their efforts to track and reduce emissions – at a time where we need to redouble our commitment”.
GBTA SVP of advocacy and sustainability, Delphine Millot, said: “Sustainability is the only way we can continue to gain the benefits of travelling for work in the future.”
She added that while most large companies had not waited for CSRD to report their sustainability efforts publicly, the directive provided “harmonised rules and guarantees that the information shared with investors, stakeholders and customers is comparable and verifiable”.
European business travel association network BT4Europe, together with travel management associations in Germany and France – where governments had pushed the EU to relax reporting requirements – have also warned businesses not to lose focus on emissions reduction targets.
France’s AFTM applauded moves to provide greater flexibility for SMEs, but stressed that excluding small businesses from the scope of the CSRD “would not make sense in the medium term because small companies have massively embarked on decarbonisation operations. Where the problem now is in quantifying results so that we can get on track”.
Germany’s VDR added that “the political back and forth is a disservice to progress… clear timelines and reliability are essential for companies to prepare efficiently.” Following the rollbacks, VDR said the onus is now on associations and interest groups to define frameworks for the calculation of business travel emissions.
Angela Lille, chair of BT4E’s sustainability working group, added that “climate change is not governed by laws; only the evolution of our economic actions can help counteract it and ensure resilience”.
“Sustainability must be an integral part of the travel industry. We can achieve this by establishing a cycle between reporting criteria for Scope 1 and 2 emissions of the travel industry and Scope 3 emissions of customers… Digitalisation has enabled us to achieve significant progress, and we must continue to do everything we can to make sustainability advancements measurable and accessible to stakeholders,” she said.
Meanwhile, sustainability specialists such as Squake and Thrust Carbon, both of which offer platforms to measure business travel emissions, said CO2 management remains “a critical business function”.
“The companies that stay ahead now – by strengthening data tracking, aligning sustainability with business objectives, and embedding policies into decision making processes – will be the ones best positioned when regulations and market demands inevitably tighten again,” Squake posted on its website.
Thrust Carbon’s head of operations and policy, Tan Strehler-Weston, also said: “Moderate deregulation doesn’t have to be a bad thing if it means getting to the same end goal in a less burdensome way. While reporting requirements will be slightly delayed or become voluntary for some, we expect the most forward-thinking organisations will remain very engaged indeed.”
The Commission’s proposed changes will now be submitted to the European Parliament and the Council for their consideration and will only enter into force once the two entities have reached an agreement. The Commission, in its statement this week, urged the co-legislators to “treat this omnibus package with priority”.
Artículo publicado originalmente por businesstravelnewseurope.com
