The announcement follows declarations to simplify regulatory frameworks for businesses, and an overall drive to increase competitiveness in Europe.

By Paul A. Davies, Michael D. Green, and James Bee

On 8 November 2024, European Commission President Ursula von der Leyen indicated that certain existing and future EU ESG reporting obligations will be consolidated into one “omnibus” regulation, in a bid to streamline the increasing number of requirements that companies will face.

In particular, von der Leyen stated that the “often overlapping” reporting requirements included in the Corporate Sustainability Reporting Directive (CSRD), EU Taxonomy Regulation, and Corporate Sustainability Due Diligence Directive (CSDDD) would be combined in an effort to “reduce bureaucracy”. The new omnibus regulation is set to be published in 2025.

The Budapest Declaration

The announcement came following the meeting of EU heads of state and the European Commission in Budapest. As a result of this meeting, the European Council also introduced the Budapest Declaration on the New European Competitiveness Deal (Budapest Declaration). The Budapest Declaration sets forth a 12-point plan from EU governments, seeking to ensure economic prosperity, security, and resilience in the coming years.

Among the 12 points set out in the Budapest Declaration is an action item to launch “a simplification revolution”, seeking to provide a clear, simple, and smart regulatory framework for businesses. As a key objective to meeting this goal, the Commission must implement concrete proposals on (1) reducing reporting requirements by “at least 25%” in the first half of 2025, and (2) including red-tape and competitiveness impact assessments in future proposals.

The extent to which reporting requirements will be reduced by at least 25% remains to be seen. Von der Leyen’s announcement that “the content of the [CSRD, CSDDD and Taxonomy Regulation] will be maintained” seemingly suggests that the combined omnibus regulation will not lessen the substantive reporting requirements for companies.

The EU’s Focus on Competitiveness

While the full content and timeline of the omnibus regulation are yet to be confirmed, the EU clearly views a trimming of regulatory red tape as a key part of its attempts at increasing its competitiveness in the coming years.

Competitiveness has been a key focus of the EU in recent months. The July 2024 Political Guidelines for the Next European Commission 2024-2029 (Political Guidelines) include a new plan for Europe’s “Sustainable Prosperity and Competitiveness”, underscoring the need to “make business easier”. In this context, the Political Guidelines mention that the Commission will make proposals to “simplify, consolidate and codify legislation” in order to eliminate overlaps, “while maintaining high standards”.

Similarly, the “Future of European Competitiveness” report issued by Mario Draghi, former President of the European Central Bank, and published in September 2024, highlights a range of policy proposals and strategies seeking to improve the EU’s global economic competitiveness. More recently, in the context of the November hearings in the European Parliament, the Commissioner-designate for Financial Services and the Savings and Investments Union, Maria Luís Albuquerque, when questioned about the EU’s competitiveness approach, stated that she will be committed to promoting a sustainable finance framework “with less reporting requirements and administrative burdens”.

The extent to which this drive for competitiveness has a further impact on the EU’s ESG agenda, including in relation to initiatives such as the EU Deforestation Regulation, remains to be seen. In light of this goal, 2025 will likely bring material developments in connection with the EU’s Green Deal. Latham & Watkins will continue to monitor developments in relation to ESG regulatory trends in the EU and globally.

The authors would like to thank Toon Dictus for his contribution to this article.