Today, the European Commission published a series of legislative proposals in the area of sustainable finance as well as to strengthen the international competitiveness of the European economy. The so-called omnibus package comprises two key measures: Firstly, the deadlines for the application of the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the Taxonomy Regulation will be postponed. Secondly, the areas of application of these regulations will be restricted.
The amendments to the CSRD are relevant for the securitisation industry, as the provisions contained therein on the possible obligation of sustainability reporting also affect securitisation special purpose entities (SSPEs).
What changes are planned for the sustainability reporting?
The CSRD, which has been in force since January 2024, should actually have been transposed into national law by 6 July 2024 – a step that many EU member states have not yet completed. In EU member states that have adopted the CSRD into national law, companies that fall within the scope of the CSRD for the first time are already subject to the sustainability reporting obligation in the current financial year. The omnibus package now stipulates that this reporting obligation will not apply until the fiscal year 2027.
In addition, the threshold for the reporting obligation is to be adjusted: In future, only companies with at least 1,000 full-time employees (instead of the previous 250) would be affected. The furtherr criteria for a reporting obligation remain unchanged – a net revenue of at least 50 million euros and/or a balance sheet total of more than 25 million Euro can still trigger a reporting obligation.
What happens next?
The Commission’s proposals now will go through the legislative process in the European Parliament and the Council of Ministers. The Commission has emphasised that the initiative should be treated as a priority. Specific draft legislations – in particular on the amended CSRD – are expected to be adopted by mid-year.
At the same time, EU infringement proceedings have been ongoing since the end of September 2024 against Germany, among others, which has not yet transposed the existing CSRD into national law. However, the pressure on the newly constituted Bundestag to pass a corresponding implementation law is unlikely to be high in view of the omnibus package.
In principle, a reduction of red tape in the area of sustainable finance to strengthen the international competitiveness of the European economy is to be welcomed. However, the ongoing legislative processes at EU level, combined with the standstill in the German CSRD implementation law, are leading to legal uncertainty – especially for German SSPEs (for SSPEs in other EU member states, however, the respective national law applies!) As TSI, we therefore remain in close contact with Berlin and are campaigning for a clear regulation that fundamentally exempts SSPEs from the obligation to report on sustainability.