MEPs from the European Parliament’s legal affairs committee and the European Council have reached a provisional deal on revising the EU’s sustainability reporting and due diligence requirements.
The provisional agreement, subject to a parliamentary and committee vote, will significantly reduce the scope of the EU’s reporting and due diligence rules under CSRD and CSDDD.
Sustainability reporting will be restricted to companies employing over 1000 people with a net annual turnover of €450m. The scope of the due diligence rules will also reduce under the deal to apply only to companies employing more than 5000 people and earning a net annual turnover of more than €1.5bn.
The requirement to prepare a transition plan under the due diligence rules will be entirely deleted if the deal is approved.
The watering down of EU’s sustainability reporting and due diligence rules has been sharply criticised by investors. Earlier this year, AkademikerPension CIO Anders Schelde told Net Zero Investor that the direction of EU regulatory reform was ‘deeply concerning’.
Despite the criticism, European lawmakers have justified the push for simplification based on reducing administrative burdens for companies and the need to protect the competitiveness of European firms.
“We have a deal that delivers on simplification”, said rapporteur Jörgen Warborn.
“This agreement brings historic costs reduction. There is no other single file that cuts reporting costs more than this one in the history of the European Union’”, Warborn added.
Warborn’s arguments were echoed by Danish minister for industry, business and financial affairs Morten Bødskov who claimed, “For too long, we have thought that more complex green rules were the way to create new green jobs. It is quite the opposite”.
The legal affairs committee will vote on the deal on December 11 while the European Parliament will discuss it at the plenary session later in the month.
