EU Competitiveness Compass

The European Commission recently published the Competitiveness Compass: a plan to “steer the EU towards greater sustainable competitiveness”. One key element of this extensive plan is the simplification and harmonization of EU regulation. Part of this Compass is the introduction of three Omnibus Packages, with the first aimed at ESG reporting and due diligence, including CSRD, EU Taxonomy, CSDDD and CBAM.

While many companies are already well underway in their reporting and broader ESG journeys, this announcement naturally leads to many questions on what exactly will change, and how that impacts running and to be planned projects. On this page you will find relevant insights on the EU Competitive Compass developments provided by our experts. 

Driving productivity through innovation is crucial for Europe's industrial structure. The Commission will work to create a new dynamism by:

• Facilitating the establishment and scaling up of start-ups.
• Creating a deeper and more efficient venture capital market.
• Easing mobility and retention of talent.
• Investing in state-of-the-art infrastructures.
• Boosting innovation and research.

Integrating decarbonisation policies with industrial, economic, and trade policies is a powerful driver of growth. This pillar focuses on:

• Facilitating access to affordable energy.
• Strengthening the business case for a clean transition.
• Promoting the competitiveness of clean tech manufacturers.

Integrating security and open strategic autonomy considerations into EU economic policies is essential for economic success and competitiveness. This pillar aims to:

• Develop policies, partnerships, and investments to ensure economic security, resilience, and strategic interests.
• Strengthen defence industrial capabilities through pan-European cooperation.
• Improve preparedness for economic and security challenges.

The horizontal enablers are designed to reinforce competitiveness across all sectors, providing a strong foundation for the transformational imperatives of the Competitiveness Compass.
 

1. Simplification Omnibus Packages

   This enabler focuses on streamlining regulations and processes to reduce administrative burdens. By simplifying the regulatory environment, businesses can operate more efficiently and focus on growth and innovation.

2. Single Market Strategy

   Removing barriers within the Single Market is essential for creating a seamless and efficient market. This enabler aims to ensure that goods, services, capital, and people can move freely across the EU, fostering economic integration and competitiveness.

3. Financing

   Access to financing is crucial for businesses to support growth and innovation. This enabler ensures that businesses have the necessary financial resources to invest in new technologies, expand operations, and compete globally.

4. Skills and Quality Jobs

   Promoting skills development and creating quality job opportunities are key to maintaining a competitive workforce. This enabler focuses on enhancing education and training programs to equip workers with the skills needed for the future economy.

5. Competitiveness Coordination Tool

   Better coordination between EU and national policies is vital for achieving common goals. This enabler aims to align policies and initiatives across different levels of government to ensure a cohesive and effective approach to competitiveness.

If the proposal goes ahead as planned, this means a significant decrease of the number of in scope companies. At the same time, the strategic benefit of structurally collecting relevant steer information on sustainability and effectively managing sustainability related impacts, risks and opportunities does not disappear. In a world increasingly seeing the impact of climate change, biodiversity decline and social unrest, a focus on sustainability is not (just) a compliance exercise but a strategic endeavour. 

We recommend companies to first make a structural assessment of what the factual compliance situation is and monitor developments carefully. Based on the new compliance context and your ambition as a company, new priorities and the scope and pace of your sustainability reporting project can be determined. 

All of the above mentioned proposals could be subject to change as they progress through the European Parliament, the Council of the EU and are transposed into national law. We'll continue to monitor the developments and share updates.

Read our comment letter on the proposal to amend the delegated acts on the EU Taxonomy.

Sustainability is vitally important for all companies. KPMG firms support organizations of any Sustainability reporting level to make their sustainability transition as smooth and beneficial as possible. We bring support both on technical capabilities as well as organizational capabilities and bring full transition support.

With our tailored, modular project approach, and KPMG professionals extensive experience in providing advisory and assurance we can help you address ESG challenges and get ready for a new level of sustainabilty reporting. Click here for more information on our ESG Services