EU Commission proposes reducing bureaucracy

The EU Commission aims to reduce bureaucratic hurdles for businesses and is launching two omnibus packages to this end. The skilled trades sector welcomes this but calls for further measures.

This article is part of the special topic Bureaucratic madness in the craft industry

The the European Commission has taken various measures to reducing bureaucracy This is expected to save €6,3 billion in administrative costs annually. The Commission also expects the simplification of EU rules to trigger €50 billion in public and private investment, supporting its policy priorities. 

"EU companies will benefit from streamlined rules on sustainable financial reporting, sustainability due diligence, and the taxonomy. This will make life easier for our companies while ensuring we stay firmly on track with our decarbonization path," said Commission President Ursula von der Leyen. Further simplifications are on the way.

SMEs in particular should benefit

These first two packages contain simplifications in the areas of sustainable finance reporting, sustainability due diligence, the EU taxonomy, the Carbon Border Adjustment Mechanism, and European investment programs such as InvestEU and the European Fund for Strategic Investments. Small and medium-sized enterprises (SMEs) are particularly expected to benefit. 

Sustainability reporting obligations will now apply to companies with 1.000 or more employees. Previously, the limit was 250 employees. The measures will focus the obligations on the largest companies and ensure that they do not burden smaller businesses, the Commission explains. Overall, around 80 percent of companies will fall outside the scope of the relevant directive.

"Relief for businesses is long overdue"

At the same time, the Commission is presenting the "Clean Industrial Deal" to accelerate decarbonization and support companies in their transformation. The Commission is also focusing on reducing energy prices, especially for energy-intensive industries. This will also include initiatives for clean technologies and the circular economy. €100 billion will be available for this in the short term.

"The relief for companies is long overdue: It is all the more important and positive that the EU Commission is now presenting concrete proposals to simplify European legislation and strengthen competitiveness," says Holger Schwannecke, Secretary General of the Central Association of German Crafts.

Do not overburden SMEs

"The proposals rightly aim to simplify sustainability and supply chain due diligence reporting. But this can only be the beginning: further action is urgently needed to correct unintended burdens of the Green Deal that are preventing businesses from achieving the set targets."

Schwannecke calls for a revision of the deforestation regulation so that it doesn't overburden SMEs. From the perspective of the skilled trades, the Clean Industrial Deal sets important priorities. However, the focus is too one-sided on industry. "A visible and comprehensive SME policy that goes beyond the announced simplifications for so-called mid-caps and support for startups is still lacking."

Further reduce reporting obligations

The EU Commission has provided important impetus for more competitiveness and less bureaucracy, says Felix Pakleppa, Chief Executive Officer of Central Association of the German Construction Industry"Local companies have long been groaning under increasingly stringent regulations. Due to German and European rules, Germany is now one of the most heavily regulated EU countries."

In order to reduce the bureaucratic burden for small and medium-sized enterprises by 35 percent, as promised by the EU, reporting and documentation requirements must be further reduced. "Only in this way can medium-sized construction companies make their contribution to a competitive and climate-neutral Europe."

Measures in the Omnibus packagessustainability reporting
The main changes in the area of ​​sustainability reporting (Corporate Sustainability Reporting Directive – CSRD and EU Taxonomy) are intended to achieve the following:
- around 80 percent of companies will be excluded from the scope of the CSRD, so that sustainability reporting obligations will be concentrated on the largest companies, which are most likely to have the greatest impacts on people and the environment;
- Ensure that sustainability reporting requirements for large companies do not burden smaller companies in their value chains; postpone by two years (to 2028) the reporting obligations for companies currently within the scope of the CSRD and required to report from 2026 or 2027.
- Reducing the reporting burden under the EU Taxonomy and limiting it to the largest companies (corresponding to the scope of the CSDD), while maintaining the possibility of voluntary reporting for other large companies within the future scope of the CSRD. This should result in significant cost savings for smaller companies and allow companies seeking access to sustainable finance to continue this reporting.
- Introducing the possibility of reporting on activities partially aligned with the EU Taxonomy to encourage a gradual green transition of activities over time, in line with the objective of expanding transition financing to support companies on their sustainability journey.
- Introduction of a financial materiality threshold for taxonomy reporting and reduction of reporting templates by around 70 percent.

Due diligence obligations
The most important changes in sustainability due diligence:
- Simplifying sustainability due diligence requirements to help in-scope companies avoid unnecessary complexity and costs, for example by focusing systematic due diligence on direct business partners and reducing the frequency of regular assessments and monitoring of their partners from annually to five years, with ad hoc assessments where necessary.
- reducing burdens on SMEs and small mid-caps by limiting the amount of information that can be requested from large companies in the context of value chain mapping;
- further harmonisation of due diligence obligations to ensure a level playing field across the EU;
- abolishing the EU's civil liability regime, while respecting victims' rights to full compensation for damage caused by non-compliance and protecting companies from overcompensation under Member States' civil liability regimes;
- more time for companies to prepare to comply with the new requirements by postponing the application of sustainability due diligence obligations for the largest companies by one year (to 26 July 2028) and bringing forward the adoption of the guidelines by one year (to July 2026).

Carbon Border Adjustment Mechanism
The most important changes to the Carbon Border Adjustment Mechanism:
- Small importers, especially SMEs and private individuals, are exempted from CBAM obligations.
- Simplification of rules for companies that remain within the scope of CBAM.
- In the long term, CBAM should become more effective by strengthening rules to prevent circumvention and abuse.
- This simplification precedes a future extension of CBAM to other ETS sectors and downstream goods, followed by a new legislative proposal to extend the scope of CBAM in early 2026.
Source: EU Commission

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