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13 Sep 2023

Frank Bold

‘SME Relief Package’: European Commission should not undermine own sustainability reporting standards by exempting large companies through the back door, says Frank Bold

In light of today’s State of the Union Address by President von der Leyen and the  ‘SME relief package’ presented by the European Commission yesterday, Frank Bold calls on the Commission not to disregard the political agreement reached in 2022 on the Corporate Sustainability Reporting Directive (CSRD). The relief package should not exempt certain large companies from providing any sustainability data, including on climate or own workers...

Despite being named ‘SME-relief package’, Action 9 of this recent plan seems to be less about the challenges small and medium-sized enterprises face, but reads like an attempt to curtail the ambition of the EU sustainability framework as a whole and exempt certain large enterprises from its scope. Business associations representing large companies have been trying to make the EU cut back on its ambition during the policy making processes previously.

  1. To recall, first, the CSRD and the EU Taxonomy already only target a very small portion of EU companies, 0.2 percent of the whole (according to Eurostat).
  2. Second, for the implementation of the new sustainability reporting standards, the EU already provided companies with less than 750 employees with a longer timeframe to disclose the data. 
  3. Thirdly, many factors can make it difficult for companies to comply with the laws, such as a lack of digitalisation of government services and complex corporate structures, but the mere costs of providing transparency about companies’ sustainability are low...

The main goal of the new EU sustainability reporting system is standardisation, and through it simplification and cost saving. EU politicians who support this curtailing of ambition via  the relief package seem to ignore the fact that the demand for sustainability data is already a business reality. Companies, large and small, are already dealing with increasing and diverging requests and forms from banks and their business partners on a daily basis. If the EU now introduces more and more carve-outs to the application of the standards, they will cease to be fit for purpose.

Furthermore, the standards play an invaluable role by providing companies with a clear framework for key ESG data as well as human rights due diligence and climate targets and transition plans. This is extremely helpful in building and understanding on how to approach sustainability in disclosures as well as in their business considerations and planning...