Businesses and Financiers Push to Preserve Significant EU Sustainability Disclosure Obligations and Duty-to-Care Regulations
A coalition of 198 organisations, including more than 150 companies and investors, has expressed concerns about the European Commission's Omnibus I initiative proposals, which could significantly reduce the scope and depth of sustainability reporting requirements. The coalition, which includes energy multinational EDF, IKEA retailer Ingka Group, European energy company Vattenfall, telecommunications company Nokia, insurer and asset manager Allianz, asset manager La Banque Postale Asset Management, and financial services firm Nordea, among others, is advocating for the preservation of meaningful sustainability reporting and due diligence requirements.
The European Commission's Omnibus I initiative proposes a significant scaling back of the Corporate Sustainability Reporting Directive (CSRD)’s scope by raising the employee threshold from 250 to 1,000 employees, drastically reducing the number of companies covered (by approximately 80%). It also introduces a new financial threshold of €450 million net turnover for CSRD coverage, further narrowing the number of companies subject to reporting.
The coalition, however, seeks to maintain meaningful sustainability reporting and due diligence requirements rather than the drastic reductions proposed by the European Commission. They oppose the proposal to raise the employee threshold for companies required to comply with CSRD to only those with more than 1,000 employees, which would remove about 80% of companies from reporting obligations.
For the Corporate Sustainability Due Diligence Directive (CSDDD), the Council proposes covering only companies with more than 5,000 employees, which limits the scope to about 1,000 companies. The coalition advocates for retaining a broader scope and deeper disclosure requirements to ensure sustainability transparency and corporate accountability are preserved.
The coalition's position is based on the belief that meaningful reporting is crucial for the sustainability transition, and weakening these requirements would be detrimental to long-term environmental and social goals. They emphasize that the rules also promote competitiveness, growth, long-term value creation, and returns for investors.
The Commission's Omnibus proposal also calls for a significant reduction in the number of mandatory data points required by the CSRD's underlying European Sustainability Reporting Standards (ESRS). The coalition recommends simplifying the ESRS while maintaining the double materiality approach of the CSRD. They also suggest ensuring interoperability with international standards and frameworks such as the ISSB, GRI and TNFD.
Moreover, the coalition advises to ensure that the regulations' value chain cap allows for a "constructive exchange of sustainability information between investors and companies." They propose a phase-in period of 2 - 4 years, starting with companies with more than 1,000 employees, for the implementation of the CSRD.
Allianz SE Board of Management Member Günther Thallinger stated that it's important to keep the key rules in the CSRD and CSDDD to ensure companies provide complete and reliable data for investment decisions and transformative actions. The group believes that rules on sustainability reporting, transition plans, climate targets, and due diligence are crucial for achieving the EU's economic and sustainability goals.
Overall, the coalition argues that the Omnibus I changes undermine the original intent of the CSRD to foster transparency and sustainability progress by excluding too many companies and reducing the quality of reported information.
[1] Coalition Statement: [Link to the statement] [2] European Commission's Omnibus I Initiative Proposal: [Link to the proposal] [4] Detailed Analysis of the Coalition's Position and Omnibus I Proposals: [Link to the detailed analysis]
- The coalition, which includes various businesses, finance institutions, and insurers, argues that the European Commission's Omnibus I initiative proposal undermines corporate sustainability by significantly scaling back the Corporate Sustainability Reporting Directive (CSRD)’s scope, which could potentially lead to a decrease in sustainability transparency and corporate accountability.
- In a bid to maintain meaningful sustainability reporting and due diligence requirements, the coalition opposes the proposal to raise the employee threshold for companies required to comply with CSRD to only those with more than 1,000 employees, emphasizing that this could remove about 80% of companies from reporting obligations, negatively impacting the sustainability transition and long-term environmental and social goals.
