Earlier this month, the President of the European Commission Ursula von der Leyen introduced a new initiative that would consolidate different ESG reporting obligations in the European Union into one regulation.
The initiative’s objective is to enhance the European Union’s competitiveness while simplifying the regulatory landscape. The European Commission is now working to reduce the regulatory burden by combining the following regulations into one:
This regulation is part of the European Union’s green deal and is focused on driving investment into sustainable activities while also aligning financial markets with environmental goals.
This regulation contains reporting requirements for firms on their sustainability practices, aiming to ensure accountability and transparency. It requires that all firms share information on how they monitor ESG issues, which in turn allows consumers and investors to make more informed choices.
This directive is focused on making sure firms evaluate and manage the adverse impact their operations have on human rights and environments along their chains of activities globally.
President von der Leyen explained that this consolidation would decrease the bureaucratic burden on in-scope firms without changing the obligations imposed by these rules.
In-scope firms include:
- Firms in the EU with over 1000 employees on average and a net global turnover that exceeds EUR 450 million ($474 million)
- Non-EU firms with a net global turnover that exceeds EUR 450 million within the EU
- Firms with over 5000 employees on average and a net global turnover of over EUR 1.5 billion ($1.58bn) in the last financial year
This latest announcement follows the Budapest Declaration, which is focused on addressing the current economic, geopolitical and demographic challenges while ensuring Europe’s continued prosperity.
The Council of the European Union also asked that the European Commission present proposals on decreasing reporting requirements by roughly 25% in the first half of next year in the declaration. Mario Draghi, the former president of the European Central Bank, published a report a few months ago drawing attention to the need for less reporting obligations.
In the report, he advised that all new proposals go through a competitiveness test to measure their impacts. These recommendations were endorsed by the council, with the report’s findings being the foundation of the commission’s efforts to facilitate investment, innovation, and cross-border trade.
The initiative is viewed as a welcome reprieve for many firms given the complex and overlapping interactions between CS3D, EU Taxonomy Regulation and CSRD.
As Europe moves to consolidate the different regulations governing ESG within their jurisdictions, North American-based firms like Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) may wish for a similar trend to unfold where they are based so that greater clarity is availed for those that wish to streamline their ESG-related activities.
NOTE TO INVESTORS: The latest news and updates relating to Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are available in the company’s newsroom at https://ibn.fm/RFLXF
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