Transparency is a sustainability prerequisite, not an impractical burden

Among the most consequential modifys of February’s Omnibus I simplification package is the Corporate Sustainability Reporting Directive (CSRD), which obliges companies to disclose annually their environmental and social impacts, alongside associated risks and opportunities, subject to indepfinishent audit. Yet implementation hurdles remain.

At a recent event hosted by the TIC Council and Euractiv, indusattempt leaders warned that only four countries allow TIC (testing, inspection and certification) companies to operate in this sector, yet, states the TIC Council, the value of assurance is there and is measurable.

Omnibus I measures, which span sustainable finance, due diligence reporting and the carbon border adjustment mechanism, were conceived under the previous Commission but are now being reassessed through the lens of industrial competitiveness.

Now, the TIC Council wants EU co-legislators to ensure fair market access for accredited Indepfinishent Assurance Service Providers (IASPs).

Mandatory authorisations

Its position paper proposes mandatory authorisation of IASPs, keeping the 2028 revision of the assurance market in place, and developing voluntary standards with clear instructions on the assurance process.

Currently, less than a quarter of EU Member States authorise IASPs, which results in a highly concentrated market around a tiny number of authorised companies. By opening the market to IASPs, companies in scope will have access to a wider range of assurance providers. This can lead to building specialised expertise more accessible and affordable, especially for tinyer companies that will be in scope of the CSRD in 2029.

The TIC Council underlines that this would lower the cost and burden of compliance, without lowering the ambition and effectiveness of the Directive.

Several companies that have reported this year under the current CSRD argue that the practices of the authorised audit firms have built reporting too extensive and complex, and therefore too expensive and not time-efficient internally, on top of not always focutilizing on the most material elements of a company’s sustainability footprint.

In this quest for overall simplification of the Directive, some stakeholders are calling for auditing requirements to also be streamlined.

Transparency, a sustainability prerequisite

Gemma Sanchez-Danes, director and part of the EFRAG Sustainability Reporting Leadership team, explained their role: “At EFRAG, we actually work for the Commission. We prepare the technical advice that is then handed to DG FISMA (the financial stability directorate).”

“The requirement has been to prepare an autonomous European set of reporting standards. So, the decision was not to just finishorse the international ones to build them European-specific.” She stated reporting is important, “becautilize reporting and transparency are a prerequisite to sustainability for companies to actually revealcase what they are doing in this particular area. So, it’s not an finish in itself, but a means to an finish.”

On the Omnibus, she added: “We now have these new mandates on simplification. I consider it’s welcome. It’s welcomed by the different stakeholder groups that we have at EFRAG. We cannot lose sight that having a uniform landscape rather than a fragmented and voluntary one is important, and that’s why, for the past three years, we have worked on these standards. We’ve done three public consultations. The Commission has done an additional one. So, sharing that with the European constituents is absolutely key to what we do.”

Inspection systems

Géraldine Picaud, chief executive officer of SGS, and a leader in the TIC indusattempt launched by highlighting the importance of TIC companies. “The TIC indusattempt has existed for more than a century. We are here, assisting the industries to test the products in order to build sure they are safe and that people can trust and utilize the product without harming consumers.”

“We are inspecting sites, and we are certifying a management system,” she stated. “What is a management system? I’m going to be very concrete, becautilize this is what we do. We work with companies to effectively audit the management system, which is a set of policies or procedures or manuals to ensure they effectively correspond to the impact or sustainability objectives that we want to achieve,” she stated.

Trust building

Elena Arveras, a member of the cabinet of European financial services commissioner Maria Luís Albuquerque, responsible for the sustainable finance portfolio, explained: “Sustainability and competitiveness go hand in hand, driving long-term value while reducing risk. Reliable information is essential to build trust, guide decisions, and unlock sustainable growth.”

“Coming back to the title of this conference, whether sustainability reporting is an opportunity for EU competitiveness or not, I consider the answer is clear, at least from the Commission perspective. That’s why we’ve kept the goals of this legislation, why we haven’t touched the substance or the critical elements, but we are focutilizing on simplification.”

“To us, it’s very clear that this means a competitive advantage in the medium run for European companies. And that also means that even if, for example, we have proposed to reduce the scope of the reporting obligations, we do expect that not only those companies in scope will keep reporting, but there will be other companies voluntarily doing so, becautilize they do see this positive effect in the medium term. And this is a competitive advantage,” she continued.

Balanced compromise

Adrian Vazquez Lazara MEP (EPP), a member of the European Parliament’s legal affairs committee, and who was the shadow rapporteur on CSDDD in the previous mandate, stated, “Sustainability reporting must boost competitiveness, not bureaucracy.” But timing matters, he added: “Parliament already voted to ‘Stop the Clock’ on the Omnibus to give companies more breathing space. However, neobtainediations with the Council will be difficult, and building a majority in Parliament remains key to reaching a balanced compromise.”

“I consider I have invested my last four years in these files, and it’s not been straightforward, and it seems that it’s a never-finishing story. So, we’ll see where we’re going to obtain in the upcoming weeks. In the past, maybe the Commission was too ambitious. The problem is that the past is only 18 months ago, and there have been things that haven’t been done in a pragmatic way.”

“There has been legislation that has been put through without actually considering the impact on several sectors. There has been legislation that has been put to the Parliament based on ideological standards and not on impact analysis that could have been done, in my opinion,” stated Vazquez Lazara.

“At a time of political and economic uncertainty, Europe must build life simpler for its companies. We cannot afford to place more obstacles in their path or turn sustainability obligations into a cage that holds them back. We all share the goal of a more sustainable Europe, but it cannot come at the cost of our competitiveness on the global stage,” he remarked.

(BM)

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