The European Union (EU) is facing a key moment, with geopolitical and economic challenges that require a strategic adaptation of its policies. In this context, the European Commission has presented the “Omnibus Law”, a regulation designed to simplify and unify sustainability regulations. Its aim is to reduce bureaucracy for companies, promoting the economy of purpose without affecting the ambitious environmental objectives of the European Green Pact.
What is the Omnibus Law and why is it important?
The Omnibus Law comes as a response to the demands of countries such as Germany and France, which seek to reduce the regulatory burden to prevent European companies from losing competitiveness at a global level. The proposal is based on the consolidation of three fundamental pillars of sustainable regulation:
1. Corporate Sustainability Reporting Directive (CSRD)
Requires companies to report on their sustainability impacts, risks and strategies.
2. Corporate Sustainability Due Diligence Directive (CSDDD)
Requires companies to identify and mitigate negative impacts on human rights and the environment in their supply chains.
3. EU Taxonomy Regulation
Defines which business activities can be considered sustainable for investment purposes.
Unification of these regulations could reduce the administrative burden by 25% for large companies and up to 35% for SMEs, facilitating compliance and promoting investment in clean technologies.
Incentives for the economy of purpose
The economy of purpose drives companies to generate economic benefits without neglecting their positive impact on society and the environment. To encourage this model without increasing bureaucracy, the Omnibus Law proposes:
1. Simplification of reporting
Reporting requirements will be reduced and harmonized, allowing companies to communicate their sustainability progress without redundancies.
2. Fiscal incentives
The European Commission suggests that Member States implement measures such as:
- Reduction of VAT on electricity to the legal minimum (5%).
- Elimination of non-energy related taxes on electricity bills. These actions seek to stimulate investment in green projects.
3. Digitalization of compliance
The creation of centralized platforms for ESG data management (environmental, social and governance) is proposed, which will improve efficiency and avoid duplication of efforts.
Europe in a challenging geopolitical context
In a world where powers such as the United States and China compete fiercely, Europe must consolidate its leadership in the economy of purpose. To this end, the “Compass for European Competitiveness” seeks to revitalize industry by simplifying regulations and reducing bureaucratic burdens, without compromising decarbonization targets for 2050.
Benefits of this strategy:
- Protects key sectors from unfair competition.
- Attracts investment in technology and clean energy.
- Promotes innovation in strategic areas.
A more agile and coherent regulatory framework will allow Europe to consolidate its position in sustainability, turning the economy of purpose into a competitive advantage at a global level.
The proposed Omnibus Law represents an opportunity for the European Union to reaffirm its commitment to sustainability and, at the same time, strengthen the competitiveness of its businesses. With simplified regulation and clear incentives, an economy of purpose that benefits the environment, society and business innovation can be fostered. In an increasingly interconnected and competitive world, this initiative could make a difference to Europe’s future.