Riigikogu approved EU directive before extent of its bureaucracy apparent

Riina Sikkut (SDE) at a Riigikogu committee meeting.
Riina Sikkut (SDE) at a Riigikogu committee meeting. Source: Erik Peinar/Office of the Riigikogu

A European Union directive which allegedly piles on additional bureaucracy on to business and whose workings even now remain opaque was approved by the domestic legislature in Estonia, prior to its full scope being known. At the same time, responsibility seems to have been passed from pillar to post between various political parties and Riigikogu committees.

The then Reform/Center coalition government approved the directive in December 2021, and it was adopted around a year later, but by some estimations administrative costs of implementing the directive, which is aimed at sustainability primarily, will cost businesses around €100,000 per year, ERR reports.

Additionally, while one Riigikogu committee approved the government's directive, another did not, even as at least one MP sat on both committees and would have been aware of the issues.

Concerns have been addressed by business chiefs, including the CEO of shipping line Tallink, who referred to the additional bureaucracy as "mindless".

Riina Sikkut (SDE), current Minister of Economic Affairs and Infrastructure, was in the fall of 2021 in opposition and was a member of the Riigikogu's Finance Committee and vice-chairman of the EU Affairs Committee as well.

Sikkut said in fact the government was critical of the EU directive and need to report on sustainability.

"The government's views were not in any way supportive of the sustainability report. The government's viewpoint was critical, highlighting the need to avoid increasing the administrative burden," Sikkut said, in relation to the EU Affairs Committee decision.

In effect this meant that a fundamental mandate had been given to establish government's support of the sustainability reporting requirement. However, this draft report form, which has now been developed, was not supported by the Riigikogu, and in fact did not exist at that point in time.

"After this decision was made at the European level, the [European] Commission began to develop the [current] format [of the directive]," Sikkut said.

Sikkut: Directive's implementation is burdensome

"In my opinion, the dissatisfaction we see now is not fundamentally with the reporting obligation as such, but rather with the specific way in which it has to be carried out. It is now, rightly, seen as burdensome. The expectation that the administrative burden would not increase was, in my opinion, the same everywhere," Sikkut continued.

On the question of whether Sikkut, as economic affairs minister, would now be in a better position to protect businesses' interests had she been more critical of the directive when she was vice-chair of the EU affairs committee, the minister said this was "hard to say", and noted that had the current format been in existence at the time, a more critical line would have been viable.

Sikkut conceded that pointless bureaucracy helps noone, including business.

"Every additional obligation should be one in which a company also sees value," she added.

Center MP: Estonia not vocal enough in EU negotiations

Center Party MP and former environment minister Erki Savisaar said that, in retrospect, concerns relating to the directive had not been sufficiently heard, adding that Estonia tends not to be vocal enough in EU negotiations.

Savisaar also said that a tactic which he said was used by "many southern member states", which he described as involving a chasing off and making statements about not liking something, then retreating several steps and finding agreement later on, was not helpful.

Erki Savisaar. Source: Siim Lõvi /ERR

At the same time, Estonia tended to identify problems in later stages of negotiations, he said.

An amendment proposal could have been submitted to the Riigikogu EU Affairs Committee and then voted on, he said.

Riigikogu committees are generally too impassive in raising concerns, mainly to avoid delays and impasse in introducing legislation, Savisaar added.

This was hampered by the fact that: "Europe is in a huge hurry with its green pact. All the directives which relate to that, no matter what the topic is, are conducted hastily, without thorough impact analysis and without any substance," emphasized Savisaar.

Reform MP sat on both Riigikogu committees

Another MP who sits on both the finance and EU committees is Aivar Sõerd (Reform), who was present at all three sessions which looked at the directive, held in December 2021.

MP Aivar Sõerd (Reform). Source: Priit Mürk/ERR

Sõerd said that so far as he recalls, Mirjam Suurekivi, an official at the Ministry of Finance, conducted a thorough review of the directive.

"Indeed, we had questions and alarm bells sounded on whether we were certainly on the right track with this issue. We were worried also about it leading to a sprawling bureaucracy - that was one issue - then what was the goal of asking for all this data," Sõerd said, with reference to the finance committee session.

The vagueness of the directive meant the Riigikogu's Finance Committee had insufficient information on which to approve the government's position, then to go to Brussels for negotiations, Sõerd said.

However, in his dual rose as EU Affairs Committee member, Sõerd approved the government's position just days later.

Sõerd said this had been in error, adding that the EU committee had in any case approved the government's position, whereas it could have followed the finance committee's lead.

Sikkut agreed with Sõerd, saying: "In retrospect, it's very easy to be smart. At that time, however, there was simply no information on which to base a more critical line. In this sense, I agree with Aivar Sõerd."

Tallink CEO: 'Mindless bureaucracy'

The alliterative lineup of Sikkut, Sõerd and Savisaar also conceded that the Riigikogu lacks the resources to meaningfully process all relevant EU documents, given their size, number and complexity.

The Ministry of Finance must now agree on the substantive content of sustainability reporting with other member states.

This depends on whether the new standard comes with a lower administrative burden than the current draft something which shipping line Tallink's CEO Paavo Nõgene raised concerns about.

Nõgene at the start of this month asked the EU committee for information on how the EU directive had been discussed.

Paavo Nõgene. Source: Priit Mürk/ERR

The directive requires larger companies to fill out a nearly thousand-line questionnaire on sustainability every year, he said, adding that this will cost tens of thousands of euros in additional costs to businesses, while he doubted whether anyone would actually analyze the submitted data once it had been compiled in any case.

Raivo E. Tamm (Isamaa), current chair of the Riigikogu Affairs Committee , responded on Monday by referring to the two Finance Committee sessions and one EU Affairs Committee session, which addressed the matter and all took place in the same week in December 2021.

Raivo Tamm (Isamaa). Source: Ken Mürk/ERR

The sessions' minutes, ERR reports, highlighted that the finance committee was aware of Nõgene's concerns, while Erki Savisaar then stated that, due to the lack of clarity, the EU Affairs Committee should codify national positions before entering into negotiations at EU level.

The submitted draft directive "blurs and dilutes" actual environmental goals and places undue burdens on companies, the committee found, meaning it had insufficient information to formulate a final position.

However, the EU committee approved the government's position three days later, and the relevant directive was adopted in December 2022 during EU negotiations.

The exact volume and content of sustainability reporting is even now not clear, ERR reports.

The Ministry of Finance responded to an ERR query on the issue by stating that the actual volume of sustainability reporting depends on a standard which has yet to be agreed upon by the EU. This should happen by the end of June this year, the ministry said.

The XIV Riigikogu's last working day is February 23.


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Editor: Andrew Whyte, Mait Ots

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