Regulate, Prosper, Survive
4 years, 4 months, 13 days, 21 hours
8 March 2025
We need the story of decarbonisation also to be a story of future prosperity.
On 26 February, the European Commission published two highly significant sets of proposals under its green (now green growth) agenda.
The first, the Clean Industrial Deal, is a hugely diverse set of interventions to increase the pace on industrial decarbonisation, electrification, cleantech and circularity.
The second, the Omnibus, (like Taxonomy, another EU adoption of a term that gives no clue whatsoever to what it is about), is focussed on reducing the burden of sustainability reporting on EU businesses.
Both originated from the September 2024 report by former European Central Bank President and Italian Prime Minister Mario Draghi. That report argued that Europe needed policies that would boost its economic vitality and innovation, in response to its shrinking workforce and low productivity. It advocated concerted effort to boost a green industrial future, as well as pare back the burden of over-regulation.
It is worth noting that both proposals still need to go through layers of EU governance which could take more than a year for some elements, and may result in changes.
What to make of it all? There has been some considerable negative reaction in the climate community to the Omnibus proposal, principally because it reduces the number of EU business that are in the scope of the reporting obligations by 80%, from c.50,000 businesses to c.10,000. This is because the threshold for reporting has been raised from businesses with more than 250 or 500 employees (depending on the business), to more than 1,000.
There is also concern that it leaves some businesses having undertaken abortive work to report, when that is no longer required, and others uncertain what to do depending on whether the new proposals pass or not.
There is also a reporting delay – a ‘stop the clock’ on implementation, slipping the obligation on companies by up to 2 years. I loved one sharp commentary I read which concluded ‘Unfortunately, the Commission cannot so easily ‘stop-the-clock’ on global temperature increases and the closing window for action between now and 2050’.
Knowing as you do my weekly strident plea for more pace and action on climate, you may expect me to be in the same camp of protest at these changes. But I am not sure I am. Taken in the round the scale of ambition in the proposals together is breathtaking.
KPMG has argued that ‘reporting for the purpose of compliance alone never delivers value’. We need the effort to go where it really makes a difference. And if we are to bring popular consent with us, we need the story of decarbonisation also to be a story of future prosperity. This is where the EU is now heading, perhaps belatedly, and I really welcome that.