ERU, Alm.del - 2023-24 - Bilag 123: Notat om høringssvar til Europa-Kommissionen om en 25 pct. reduktion i rapporteringsbryder for europæiske virksomheder, fra erhvervsministeren

Erhvervsudvalget 2023-24
ERU Alm.del Bilag 123
Offentligt

08 February 2024

2023 - 14253

MarRay

Danish input to how to reduce administrative burdens

The Danish government fully shares the aim of reducing and simplifying

reporting requirements.

We appreciate the Commission’s

initiative to

launch the call for evidence related to ‘administrative

burdens

–

the ra-

tionalization of reporting requirements’

concerning the Commission's

aim of reducing reporting obligations by 25 per cent. Reducing admin-

istrative burdens is a prerequisite for maintaining the competitiveness of

European businesses amid geopolitical tension and increasing global

strategic competition. To this end, Denmark would kindly like to bring

attention to:

The fact that the implementation of the CSRD has been esti-

mated to cost five times more than originally estimated;

That we need coherent policy measures that set common mini-

mum standards and common criteria for ESG-solutions;

That the Digital Product Passport serves as the default option

when it comes to product data sharing requirements;

That redundancies and duplications are avoided.

Sustainability reporting

Administrative burdens related to corporate sustainability reporting need

special attention. The green and digital transition of European businesses

is necessary to deliver on the global challenges facing us. However, we will

not achieve the important aim of the vast number of new and upcoming

legislation if companies are not able to comply with the new requirements.

In particular, Denmark is very concerned about the expected administrative

burdens related to the upcoming corporate sustainability reporting. New

estimates

–

carried out on behalf of the Danish government

–

show that

businesses’

implementation and annual costs related to the CSRD could

prove more than five times more costly than initially expected based on an

extrapolation of the Commission’s original estimates. We must direct par-

ticular attention towards reducing these burdens or risk jeopardising sup-

port for the green transition as well as confidence in European competitive-

ness.

The extension of the materiality assessment to all standards except from

the general standards and the postponement of the deadline for the adoption

ERU, Alm.del - 2023-24 - Bilag 123: Notat om høringssvar til Europa-Kommissionen om en 25 pct. reduktion i rapporteringsbryder for europæiske virksomheder, fra erhvervsministeren

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of the sectoral European sustainability reporting standards by two years are

both welcome and helpful in this regard. But more needs to be done. With

a view to the preparation of the sectorial reporting standards as well as re-

porting standards for SME’s and third country undertakings,

we need to

focus on high quality reporting and not the sheer number of reporting re-

quirements.

The SME standards will be crucial as these will not only set out the report-

ing obligations for in-scope

SME’s

but also the scope of data that larger

companies will need from SMEs in their supply chain in order to fulfill

their reporting requirements. It is therefore of utmost importance that the

upcoming standards become proportional in scope and quantifiable in na-

ture. While qualitative disclosure requirements are important to provide

context to the quantitative calculations, allowing for comparisons across

sectors and industries, too many qualitative disclosure requirements in the

upcoming standards will risk decreasing the value-added of the standards

and make room for greenwashing. Even more importantly, it will reduce

the potential of digital, standardized and automated sustainability reporting

which is fundamental for minimizing the compliance burden and thus pre-

serving European businesses competitiveness in the green transition.

To make European sustainability reporting a success, we must learn from

our experience with reducing the cost of businesses' annual financial re-

porting and improve and standardize the digital infrastructure around sus-

tainability reporting in similar vein. If we succeed, we will not only be able

to reduce companies’ administrative burdens but also enhance

the trustwor-

thiness of the companies' sustainability reports.

To this end, we need a coherent set of policy measures that may encompass:

•

Common minimum standards and a robust, decentralised sustainability

data infrastructure underpinning EU legislation (as mentioned in the

previous section).

•

Common criteria and minimum requirements for various ESG-solu-

tions, such as functional requirements for business systems, emission

calculation standards following internationally recognised methodolo-

gies as well as transparency requirements for data providers to incen-

tivise openness in the collection, storing and use of sustainability and

supply chain data.

•

Establishing an accessible, authoritative and interoperable EU database

with officially recognised sustainability related data, e.g. CO

-emis-

sions factors.

•

Making sure that the Digital Product Passports, as proposed in the

Ecodesign for Sustainable Products Regulation, serve as the default op-

tion for future product legislation that sets out product data sharing re-

quirements.

ERU, Alm.del - 2023-24 - Bilag 123: Notat om høringssvar til Europa-Kommissionen om en 25 pct. reduktion i rapporteringsbryder for europæiske virksomheder, fra erhvervsministeren

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Such policy measures present a sophisticated and ambitious approach to

achieve the 25 per cent reporting reduction target without undermining the

policy objectives on sustainability while maintaining the pivotal role of

businesses in advancing the green transition.

Reducing reporting requirements

The initiatives tabled with the Commission 2024 work programme, aim-

ing at bringing about more than EUR 3 billion in cost savings, are all

steps in the right direction. We especially welcome the newly adopted

directive which amends the thresholds in the Accounting Directive for

determining the size category of an undertaking to account for the im-

pact of inflation as well as the proposal to postpone the deadline for the

adoption of the sectoral European sustainability reporting standards by

two years.

However, these measures will have to be complimented with additional

measures to further reduce businesses’ reporting burdens.

The excessive reporting burden is not only created by too many reporting

requirements but also by duplications and overlaps across different pieces

of legislation, which leads to cumulative burdens. We particularly need to

ensure consistency and coherence in reporting requirements related to new

sustainability legislation such as:

•

Corporate Sustainability Reporting Directive (Directive (EU)

2022/2464) (CSRD)

Proposal for a Directive on Corporate Sustainability Due Dili-

gence Directive (CSDDD)

The Sustainability-Related Disclosure Regulation (SFDR)

The EU Taxonomy Regulation on Sustainable Finance

The Ecodesign for Sustainable Products Regulation (ESPR)

Make reporting more efficient through a seamless and secure ex-

change of business data

To reduce burdens stemming from businesses reporting obligations signif-

icantly, we need to seize

“the opportunities of the data economy and stand-

ardised business data”

as outlined by the European Council in its conclu-

sions from October 2023.

The common digital standards and components that the EU has already de-

veloped should be the foundation for similar efforts on a European level.

The Connecting Europe Facility (CEF) serves as a cornerstone in this en-

deavour, offering essential digital building blocks such as eDelivery, eID,

and eInvoicing that serve as critical infrastructure to facilitate more effort-

less cross-border interactions for businesses within sectors ranging from

economy and finance to energy and public security etc. To fully unlock the

ERU, Alm.del - 2023-24 - Bilag 123: Notat om høringssvar til Europa-Kommissionen om en 25 pct. reduktion i rapporteringsbryder for europæiske virksomheder, fra erhvervsministeren

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potential of these foundational elements, it becomes imperative to achieve

broad adoption of these building blocks throughout EU legislation. The

present lack of standardisation creates barriers to digitisation and automa-

tion which entails that businesses must often adapt to several different sys-

tems with different digital maturity varying from manual reporting forms

to more advanced and automated systems when complying with different

reporting requirements with the results of heavy burdens

–

particularly on

SMEs with limited administrative capacity. In addition, greater use of

standardization will significantly reduce the fragmentation that businesses

currently experience when sharing data with various business partners and

authorities across different Member States.

Clear standards that the market can apply uniformly across future legisla-

tion such as the CEF Building Blocks enable secure and smooth data ex-

change across borders that should be utilized to its fullest potential to im-

prove the efficiency of complying with various reporting requirements.

Furthermore, the common European Digital Identity Wallet, if imple-

mented properly, provides an excellent opportunity to empower businesses

across the EU to interact seamlessly with other businesses as well as digital

public services, potentially reducing administrative burdens significantly.

Hence, we call on the Commission and Member States to reduce burdens

from reporting obligations by:

•

Implementing standardized, interoperable electronic data formats for

easier submission of required information across EU Member States.

Requiring standardized system to system data exchange for reporting

with authorities, so that reports can be sent to all systems.

Aligning reporting requirements with existing international digital

standards and frameworks to facilitate cross-border trade and invest-

ment.

Promoting data sharing among Member States and government agen-

cies, enabling businesses to reuse data across various reporting require-

ments.

Defining common minimum digital standards for future legislation and

use CEF building blocks more consistently.

Simplifying tax and VAT regulations by adopting digital and standard-

ized tax systems and e-invoicing.

Making use of the eID-wallet by following an

“eID Wallet by default”-

principle to ensure that businesses face coherence across all EU legis-

lation in terms of digital certificates and power of attorney.

Through simplifying and automating reporting requirements, businesses

can benefit from increased efficiency, reduced compliance costs, and ulti-

mately, spur economic growth and innovation.

ERU, Alm.del - 2023-24 - Bilag 123: Notat om høringssvar til Europa-Kommissionen om en 25 pct. reduktion i rapporteringsbryder for europæiske virksomheder, fra erhvervsministeren

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The Danish government stands by the Commission in the endeavor to fur-

ther reduce administrative burdens for businesses and will remain at its dis-

posal to elaborate on the ideas presented here and to continue the exchange

of ideas. To support this effort, The Danish Business Regulation Forum has

presented to the Danish Government a number of recommendations to im-

prove the existing efforts to further better regulation and reduce unneces-

sary burdens on businesses, which we will provide to the Commission

shortly.