European Parliament Proposes Nearly 1000 Amendments To Sustainability Reporting Law

Forbes

a day ago

People walk by an European Union flag (Photo by)
The future of sustainability reporting in the European Union is in peril as legislators debate sweeping changes to the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directives. The Commission proposed reforms in the Omnibus Simplification Package. Those proposals are now being debated in the Parliament and Council. As the legislative process unfolds in the Parliament, members are submitting proposed amendments. The 987 proposals show MEPs fighting to save the original directives, others looking for full repeal, and movements in the middle.
As part of the European Green Deal, a trilogy of directives were passed by the EU to force businesses to address climate change and report greenhouse gas missions. The Taxonomy for Sustainable Activities created a classification system for business and investors to know what activities are considered green or climate friendly. The CSRD created requirements for businesses to report GHG emissions and other environmental, social, and governance actions. The CSDDD, also known as the CS3D, created additional reporting requirements, as well as legal liability, for companies in relation to their supply chain.
However, the cost of these proposals on businesses and the broader impact on the EU economy became a theme during the 2024 elections. The shift to the right in EU politics embolden opponents to the European Green Deal directives. As a result, the Commission proposed a package of new directives to 'reduce the burden' on businesses.
The Omnibus Simplification Package was officially adopted by the Commission in February. The proposal is being debated in the Council and the Parliament. In the Parliament, the debate is public and working through multiple committees, giving interest parties and MEPs the opportunity to voice their opinions.
The Committee on Legal Affairs, known as JURI, is the primary committee that will produce the legislation that will be sent to the full Parliament for a vote. However, related committees will draft opinions to be considered during the process. The committees work independently, but there will be coordination with party leaders and crossover of committee members.
Both the Committee on Economic and Monetary Affairs, known as ECON, and the Committee on the Environment, Climate and Food Safety, known as ENVI, posted amendments proposed by their respective members. The proposals were posted in three documents. ECON posted 514 proposed amendments and ENVI posted 473 proposed amendments, divided into 1 - 206 and 207 - 473.
The amendments change the language of the Omnibus Simplification Package as proposed by the Commission. The volume of amendments is less a function of diverse opinions as it is a procedural step. Rather than offering sweeping amendments that encompass every change a MEP or Party wants to see, every change to every subparagraph is offered in a separate amendment. In ENVI, the result is 473 amendments, that can be divided into 13 core proposals.
The most consistent theme in the amendments relates to the employee thresholds under the CSRD and CSDDD. The Commission proposal raises the threshold to 1,000 employees. In the proposed amendments in both committees, the 1,000 employee threshold is referenced 350 times.
A significant number of amendments propose to lower the employee threshold from 1000 to 500. Multiple amendments propose raising the threshold from 1,000 to 3,000. Some amendments go even further, propose raising the threshold to 5,000 employees. One amendment proposes to lower it to 250. Relating to the CSDDD, Amendment 31 in the ECON attempts to raise the value chain requirement from 1,000 employees to 10,000.
Other amendments address specific aspects of the CSRD and CSDDD, including the type of reporting that should be required and what standard of evaluation should be used by businesses to determine if information is relevant. The bookends of the debate argue for saving or fully repealing the original directives.
In Amendment 2 in the ENVI, MEPs Lynn Boylan, Emma Fourreau, Carola Rackete, Jonas Sjöstedt, Sebastian Everding, Anja Hazekamp, and Li Andersson of The Left made a strong statement in opposition to the Omnibus Simplification Package. The justification stated, 'this gross deregulation of the CSRD and CSDDD takes a narrow-minded focus on competitiveness, at the expense of human rights, that will be to the disadvantage of companies in the long run. European businesses are already seeing the impacts of climate change and the sustainable transformation of companies is integral to achieving our climate and environmental goals. To discard the bulk of corporate sustainability requirements at this time is short-sighted and reckless.'
The same group of MEP offered a proposal that appears to be in reference to a recent complaint filed by the European Ombudsman. The complaint claims the Commission 'departed from key procedural requirements foreseen in the Better Regulation Guidelines and failed to carry out a public consultation and an impact assessment without a proper justification.'
In Amendment 5, The Left proposed adding the language: "the Commission has declared it necessary to amend Directives 2006/43/EC3 , 2013/34/EU4 , (EU) 2022/24645 and (EU) 2024/1760 of the European Parliament and of the Council, without conducting any impact assessment and limiting public consultation to a closed-door stakeholder event."
Alternatively, Amendment 340 in the ECON, proposed by MEPs Christophe Gomart, François-Xavier Bellamy, Laurent Castillo, Angelika Niebler of the European People's Party, calls for the full repeal of the CSDDD.
Their justification states, 'the Commission has set itself a clear objective of simplifying the regulatory environment in order to reduce the administrative burden on European businesses by at least 25% (35% for SMEs). The changes to the CS3D proposed by the Commission below only partially address the concerns of the 5,300 European companies directly affected and their subcontractors, who will continue to face the double risk of costly administrative burdens and legal uncertainty (with fines of up to 5% of their turnover for non-compliance). Simply postponing or watering down the directive is not a satisfactory solution for achieving the EU's objectives of simplification and competitiveness.'
MEPs from of the Patriots of Europe Group and European Conservatives and Reformists Group offered similar repeals of the CSRD and CSDDD.
In the ECON Committee amendments, nearly 25% of the proposals came from political parties. The Left Group proposed 60 amendments through MEP Manon Aubry. The Greens/EFA Group proposed 63 Amendments through MEP Bas Eickhout. The remaining proposals were fragmented, with MEPs of the same party forming alliances based on individual amendments.
In looking through the ECON Committee amendments, key leaders to watch are Aurore Lalucq (S&D), Chair of the Committee; Janusz Lewandowski (EPP), rapporteur for the opinion; Lara Wolters (S&D), shadow rapporteur in JURI; and Pascal Canfin (Renew), shadow rapporteur in JURI.
Lynn Boylan, Emma Fourreau, Carola Rackete, Jonas Sjöstedt, Sebastian Everding, Anja Hazekamp, Li Andersson (The Left) - 66; Sirpa Pietikäinen (European People's Party)- 65; Marie Toussaint (The Greens/ European Free Alliance) - 65; Jana Nagyová, Mathilde Androuët, Ondřej Knotek, Filip Turek, Marie-Luce Brasier- Clain, Jorge Buxadé Villalba, Anne-Sophie Frigout, Silvia Sardone (Patriots for Europe Group) - 53; Stine Bosse, Martin Hojsík, Michal Wiezik, Emma Wiesner, Gerben-Jan Gerbrandy (Renew Europe Group) - 44; Laurent Castillo, Christophe Gomart, François-Xavier Bellamy - 31; Tiemo Wölken, Annalisa Corrado, Marta Temido, Sakis Arnaoutoglou, Delara Burkhardt (Progressive Alliance of Socialists and Democrats in the European Parliament) - 29; Jeannette Baljeu, Svenja Hahn, Andreas Glück, Ivars Ijabs (Renew) - 28; Radan Kanev (EPP) - 21; Raúl de la Hoz Quintano, Esther Herranz García, Dolors Montserrat, Carmen Crespo Díaz, Susana Solís Pérez (EPP) - 14; Jorge Buxadé Villalba (PfE)- 14; Alexandr Vondra (European Conservatives and Reformists Group) - 8, Massimiliano Salini, Flavio Tosi, Letizia Moratti (EPP) - 5; Sander Smit (EPP) - 2.
Leadership to note: Jessica Polfjärd, Rapporteur for opinion (EPP) - 23
The committees will have about a month to debate the amendments as the committee opinions are due in mid-July. Ultimately, the fate of the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive will rest in the Committee on Legal Affairs and the full vote of the Parliament. Even then, the language of the final Omnibus Simplification Package will need to be agreed upon by the Council, Commission, and Parliament. A lot of negotiations will unfold in the next few months.