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Regions and cities call for simplified, SME-proof EU regulatory framework  

Meeting the objectives of the EU Green Deal in an increasingly complex global context requires a simplified regulatory framework that guides and supports all businesses and does not stifle their competitiveness. To draw EU policymakers' attention to the importance of developing laws that are targeted, proportionate and meet the objectives for the most vulnerable economic actors, members of the Commission for Economic Policy (ECON) of the European Committee of the Regions (CoR) held a seminar on reducing regulatory burdens on SMEs.

Setting the scene for discussions in the first panel session, Eddy van Hijum (NL/EPP), Regional Minister of the Overijssel Province and CoR rapporteur on the EU SME Strategy, said that "the reality on the ground is that still too many resources in SMEs are spent on unproductive work, coping with red tape and regulatory complexities. This process has to be reversed if we aim for our European companies to prosper and remain competitive at the global level.”

Tadeusz Truskolaski (PL/EA), President of the City of Bialystok and member of the ECON commission, expressed the key role SMEs have in upholding European economies in the times of geopolitical instability. He stressed that it is important to develop public support programmes and instruments for companies, but to do it in a way that mitigates the impact of administrative burdens on SMEs’ productivity and innovation.

Speakers from the European Commission, the European Parliament and EU business associations - SME United and Eurochambres - reiterated their commitment to improving the practical implementation of the tools and instruments of the EU Better Regulation agenda, such as impact assessments and the SME test, whilst strengthening the territorial dimension of these tools.

Speakers agreed that regulatory relief, but also support in terms of finance and skills for the green and digital transitions are the main elements of a successful EU SME policy and called upon the European Commission to complement the recent ambitious industrial policy initiatives and the Single Market communication with an impactful SME Relief Package.

In the second session speakers discussed the implications for SMEs in the currently negotiated proposal for a directive on Corporate Sustainability Due Diligence (CSDD), which aims to foster sustainable and responsible corporate behaviour in global value chains.

Deirdre Clune, Member of the European Parliament and rapporteur of the IMCO committee on CSDD, stated in her video recording that the focus of the IMCO opinion was on establishing legal certainty and a level-playing field for companies to avoid creating fragmentation in the EU single market. The IMCO committee made a number of amendments to reduce regulatory burdens for SMEs, introducing a risk-based approach and group level reporting.

Lara Wolters, Member of the European Parliament and rapporteur of the JURI committee, stated that one of the main challenges in designing the Corporate Sustainability legislation was determining the role SMEs should have in it. “Our research shows that it is actually not the size of a company that is important in the due diligence process, but rather the economic sector they are active in and the related supply chain risks”, she stated. The European Parliament proposes that, if an SME would like to exclude itself from the evaluation, it should present a report stating its reasons.

Speakers representing the European Commission, the Council and business associations discussed to what extent the draft CSDD legislation reduces the risk of regulatory burden and upholds the competitiveness of SMEs. Speakers were generally in favour of a maximum harmonisation approach to the Directive in order to ensure a level playing field and minimise the risk of gold plating by Member States when transposing the rules into national law.

The event concluded with a general consensus among the panel speakers that SMEs, in order to remain competitive at the global level, need regulation that is proportionate and takes into account the reality on the ground.

You can watch the recording of the event below: 


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