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EU Simplifying Sustainability Standards
07 May 2025With its new legislative proposal, the European Commission aims to simplify sustainability regulations and reduce bureaucratic obstacles.
The European Commission has presented a comprehensive legislative proposal that includes changes to sustainability rules in order to increase the competitiveness of the European Union (EU) and create a more favorable environment for business.
With the new law proposal, it is aimed to reduce the administrative burdens on companies by at least 25 percent and to increase this rate to 35 percent for Small and Medium-Sized Enterprises (SMEs). The Commission plans to achieve the set targets by 2029.
The new sustainability-focused legal package presented by the European Commission includes Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD) and Border Carbon Regulatory Mechanism (SKDM) regulations.
The scope of companies with reporting obligations is being narrowed
The Corporate Sustainability Reporting Directive (CSRD) aims to provide greater transparency for investors and consumers by requiring companies to share information on their environmental and social impacts.
With the new regulation, it is planned to significantly reduce the number of companies within the scope of CSRD. In the current system, the reporting obligation, which applies to large companies with 250 or more employees, is limited to companies with 1000 or fewer employees. In addition, these companies must have an annual turnover of less than 50 million euros or a balance sheet of more than 25 million euros. With the proposed change, the number of companies within the scope of CSRD is expected to be reduced by 80 percent.
However, the EU Commission plans to significantly simplify the European Sustainability Reporting Standards (ESRS). In this context, it is aimed to clarify ambiguous provisions, increase compliance with other legal regulations and create more understandable and applicable reporting standards for companies.
In addition, it is recommended that the effective date of the obligations be postponed by two years for large companies and publicly traded SMEs that are obliged to report within the scope of CSRD but have not yet started implementation.
Compliance period for companies is being extended
The new bill also aims to alleviate CSDDD. According to the current regulation, starting from 2027, companies had the obligation to identify and correct human rights and environmental problems in their supply chains.
With the new proposal, companies are given more time to comply with the sustainability framework. In this context, the first reporting period of companies is planned to be postponed from mid-2027 to mid-2028.
However, companies will now only have to control their direct suppliers; The obligation to cover subcontractors and sub-suppliers at lower levels of supply chains will be removed.
Instead of annual evaluation of supply chains, it will be sufficient to review them every five years.
Tax exemption for importers is expanding within the scope of SKDM
In the new law proposal, new regulations are also proposed for SKDM, which will be applied to companies importing steel, cement and other products for emissions occurring during the production phase, starting from 2026.
According to the new law proposal, the scope of the rules that currently cover approximately 200,000 importers will be narrowed. To ensure this, companies that import less than 50 metric tons of goods per year will be exempt from SKDM liability. Under current law, this value applied to any import exceeding 150 euros.
The process of reducing the carbon tax currently paid by producers in countries outside the EU from SKDM will be facilitated. Starting from 2027, the Commission will calculate and publish the average carbon prices in other countries, so companies will not have to make this calculation themselves.
With the new regulations, it is aimed to build a more durable, sustainable and competitive European economy by increasing the investment capacity of the public and private sectors across the EU. The new law proposal presented by the Commission will be submitted to the European Parliament and the EU Council for consideration and will enter into force if approved.
Source: ISO Green Blog
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