Professor and Associate Dean at Copenhagen Business School I focused on ESG and corporate sustainability
The EPP has tabled two proposals for a compromise on the #omnibus in the Parliament. Option 1 for a pro-European majority, and Option 2 that could be voted through with a far-right majority. The proposed criteria would slash the scope of the #CSRD by about 90–92% and of the #CSDDD by around 70%. Let’s be clear about two things 👇 1️⃣ Such significant scope reductions have really nothing to do with regulatory simplification. This takes us back to a time when sustainability was seen as something only big corporations could afford. The idea that voluntary action will fill the gap is wishful thinking, and research doesn’t support it. 2️⃣ Playing the far-right card is reckless. Flirting with a majority that undermines shared European values only fuels polarisation. It makes the EPP look like it wants a "simplified debate" instead of a "debate about simplifications". The role of politics is to bridge differences, not deepen divides. Negotiators still have until Wednesday to do exactly that...
It's rather simple: The EC writes on its SF page "Sustainable finance refers to the process of taking environmental, social and governance (ESG) considerations into account when making investment decisions in the financial sector, leading to more long-term investments in sustainable economic activities and projects." If that's the goal it does not rhyme well with raising the threshold. I as investor will have greatly reduced amount / coverage with reliable and decision-useful data if the threshold goes up.
Thank you for the update/recap! I think the most damaging aspect of this is the erosion of trust it’s having on the EU legislative mechanism, even beyond sustainability. In what world do sharp reversals in landmark legislation enhance competitiveness? How can businesses plan, when any piece of complex regulation can be largely overturned, without a robust enough mechanism in place to ensure that the original intent behind said legislative piece retains its integrity? I don’t really think many people buy the “simplification” narrative, or maybe it’s just me?
Excellent oberview and update! What’s called “simplification” here risks undoing years of work to integrate sustainability into business reality. Once trust in the EU’s direction erodes, rebuilding it will be far more complex than any directive ever was.
Thanks for sharing! Does this mean that these are the only options Parliament will discuss, and that we shouldn’t expect any improvements? Interesting use of the word compromise, to me it seems the choice is between terrible and worse.
By the way, what about the so-called "wave 1" corporates (listed, > 500 people ...) which already have submitted their sustainability report using CSRD/ESRS ? I assume the new thresholds will also apply to listed companies (or wave 1); I must say I cannot keep up with all those watering down proposals ...
Andreas Rasche, considering recent developments in the European legislative landscape, I believe we are approaching option 2 more rapidly than anticipated. The EU appears to be shifting toward a marginalization of sustainability concerns — a 'sustainability in the corner' mentality.
Thank you for the update. From my understanding, the CSDDD threshold can still be lowered, but it depends on how the negotiations go on civil liability. Is that correct?
Even in just ESG Progress (not sustainability) this is the ultimate killing of impact. It drives the whole exercise into nothingness!
China will take leadership in sustainability. What EPP is doing is de facto alligning with MEGA.
Sustainability researcher at Coolset | The ESG & supply chain platform for compliance-first teams
2wFully agree, very disillusioning to see the EPP bully their way towards a complete dismantling of sustainability regulations. The zero sum game they make sustainability out to be (growth or green) is flat out dangerous for our future.