The Council of the European Union has today adopted a significant downgrade of current proposals for sustainability reporting in Europe.
The Council, which sets the political direction within the European Union, has backed drastic cuts to current proposals for sustainability reporting rules, going even further than the European Commission’s Omnibus proposal.
The announcement comes right towards the end of the Polish presidency of the Council, with Poland having been a critic of the current Corporate Sustainability Due Diligence Directive (CSDDD) in the past. From July on, Denmark is due to take over the presidency of the Council.
"Today we delivered on our promise to simplify EU laws. We are taking a decisive step towards our common goal to create a more favourable business environment to help our companies grow, innovate, and create quality jobs" said Adam Szłapka, Polish minister for the European Union.
The CSDDD rules, which were announced last year, mandate corporations to identify adverse impacts on human rights and the environment and become Paris-aligned. They also introduce a requirement for climate transition planning.
Earlier this year, the European Commission, the EU’s main executive body, had proposed a so-called “Omnibus Package”, aimed at simplifying and streamlining reporting rules. However, the proposals have been criticised as a significant weakening of sustainability reporting.
The latest proposals, put forward by the Commission today, will limit the scope of the Corporate Sustainability Due Diligence Directive (CSDDD) to companies with more than 5,000 employees (up from 1,000) and a turnover above €1.5bn (up from €450m). This would mean exempting the vast majority of large companies from due diligence obligations, environmental campaigners warn.
The requirement for climate transition plans has also been watered down: "The obligation to put into effect these plans is replaced by a clarification that this transition plan includes outlining implementing actions (planned and taken)" the proposals state. Moreover, the deadline for implementing the new rules into national law has been pushed back to 2028.
“We are witnessing a race to the bottom that excludes any rational analysis. Legislators are pushing for a polarisation of the debate, where form takes precedence over substance. Instead of addressing issues through a technical lens, there is a clear push for drastic deregulation without assessing the impact or even questioning whether the proposed solution fits the problem,” said Vincent Vandeloise, senior research and advocacy officer at the campaign group Finance Watch.
