Ursula von der Leyen, president of the European Commission, announced the tabling of two new legislative initiatives in the European Parliament last week: Net-Zero Industry Act and Critical Raw Materials Act. The first is intended to facilitate the production in the European Union of the technologies needed to decarbonize the economy so that by 2030, internal supply will cover 40% of demand. The second to make it easier to supply the European economy with the raw materials needed to produce low-carbon technologies, which today are overwhelmingly imported from outside the continent.
The most important words for reporting experts, however, came from the chairwoman at the end of the speech. Ursula von der Leyen announced that in the fall of 2023, the European Commission will announce legislative proposals that are expected to result in a 25% reduction in reporting obligations on companies. The announcement of the simplification of reporting-announced by the Commission President herself-is a rarity that hasn't happened in the last quarter century, and I've been following EU legislation closely for about that many years.
We won't know the details of the proposal until autumn, but I can already share some predictions. The first set of twelve ESRS universal standards is to be issued according to the deadline by the end of June 2023 in the form of delegated acts. However, it is highly likely that the sector standards will be issued a year later than planned - by June 30, 2025, rather than June 30, 2024. This is a big improvement, first of all for the companies (they will have a year more to prepare for reporting), but also for the creators of the standards (EFRAG will be able to work more calmly and carefully on their drafts).
What else might simplification by 25% of reporting obligations mean? We will see. I have some ideas, and I will certainly try to report some of them to the European Commission. They concern the unification of reporting under the activity and sustainability report, as well as the transition to full integrated reporting. A window for deep reform of the reporting system has just opened in Brussels. It is imperative to take advantage of it, as the next one may not be until the next quarter century.
P.S. A week ago I announced that this week I would discuss in detail the agreed approach to determining materiality in sector standards. I didn't forget about it, but news from the highest levels in Brussels proved more important. We will return to materiality next week.
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