EU Omnibus Package: ESG regulations must be simpler and better

The European Commission today introduced its Omnibus package to simplify ESG regulations. The German Banking Industry Committee (GBIC) has already put forward proposals on how to make the rulebook more efficient and have more of a controlling effect.

“We should not lose sight of the aim of climate change mitigation. We need to discuss how we get there: Reporting obligations must not be an end in themselves,” said Heiner Herkenhoff, CEO of the Association of German Banks, this year’s coordinator of the GBIC.

The current EU sustainability regulations are in some cases too extensive, adding to companies’ already heavy bureaucratic workload. The desired effect has not been achieved. The GBIC therefore believes it is right for the EU Commission to simplify the ESG rulebook and create legal certainty.

For the GBIC, it is important that the scope of the information to be reported is narrower yet more precise. The focus should be on effectiveness and meaningfulness as well as on consistency, comparability, competitiveness and practicability. The principle of proportionality must also be given greater emphasis.

“The Commission’s proposals are a concrete step towards unburdening businesses,” said Herkenhoff. At the same time, extreme weather events in recent years highlight how crucial sustainability and the transition to net zero are for the economy.

In addition, efficient regulation only works when businesses are not weighed down by unnecessary bureaucracy. “And the financial sector should not be put at a disadvantage. In order for this package to work, it must simplify reporting obligations specific to banks as well as data requirements for risk management,” said Herkenhoff. Otherwise, the unintended trickle-down effect on businesses that are not themselves subject to reporting requirements will continue.