US lobbying reaps its rewards, leaving many EU companies unhappy <\/p>\n
Companies will not have to submit climate transition plans under proposals to slash EU sustainability rules agreed largely by centre and far-right MEPs on Thursday morning. US lobbying<\/a> against the plans was widely cited as influential<\/a> in their disappearance. <\/p>\n The agreed proposal, which still needs to be negotiated with EU member states and the European Commission, would remove central elements of the bloc\u2019s corporate sustainability framework. <\/p>\n It would increase the threshold for the Corporate Sustainability Reporting Directive, making it applicable only to businesses with more than 1,750 employees and \u20ac450mn in global turnover.<\/p>\n The scope of the Corporate Sustainability Due Diligence Directive would be limited to EU companies with 5,000 employees and more than \u20ac1.5bn in global turnover, and \u20ac1.5bn for non-EU companies.<\/p>\n In addition to the removal of any requirement for companies to draw up transition plans<\/a>, the proposal for harmonised, EU-wide civil liability provisions has disappeared, and there will be no sanctions or penalties for companies not meeting the remaining parts of the CSDDD. <\/p>\n \u201cThere was a demand from the US<\/a> to delete climate plans, and the climate plans have gone,\u201d liberal MEP Pascal Canfin told journalists during a briefing after the vote. <\/p>\n The decision was taken as MEPs also voted in favour of a 2040 climate target<\/a> that would cut EU emissions by 90 per cent.<\/p>\n Partner at Sidley Austin in Geneva, Nicolas Lockhart, said that the removal of mandatory climate transition plans from CSDDD would \u201clikely lead to litigation in Member States\u2019 courts to establish a legal duty under the general law for companies to implement an effective climate transition plan\u201d.\u00a0 <\/p>\n He cited a case before the Supreme Court in the Netherlands, where the plaintiff seeks to establish a general duty under Dutch law for companies to implement climate transition plans that cover Scope 1, 2 and 3 emissions and that makes an adequate contribution to limiting the temperature rise to 1.5C.\u00a0<\/p>\n J\u00f6rgen Warborn, the parliament\u2019s lead negotiator on the omnibus and member of the centre-right European People\u2019s party, said the vote \u201cput competitiveness back on the agenda\u201d.<\/p>\n \u201cBy cutting excessive reporting obligations, we are freeing companies from unnecessary bureaucracy so they can invest where it actually matters \u2014 in innovation, clean technologies and jobs in Europe,\u201d he said. <\/p>\n In a statement, the EPP said the vote was about \u201cshowing our small and medium-sized enterprises, which are struggling to remain competitive, that we have heard their message\u201d. <\/p>\n Yet many companies, including SMEs, disagree with the EPP\u2019s version of the facts. <\/p>\n A \u2018practical\u2019 corporate tool<\/p>\n Furniture group Inter Ikea said the CSRD and the CSDDD were \u201cneeded to ensure that companies compete on the basis of responsible conduct, that data remains comparable along value chains, and that risks and impacts can be effectively identified, mitigated and reported on\u201d. <\/p>\n \u201cKeeping Europe competitive and making the framework less burdensome, especially for smaller companies, are important goals, but simplification should make compliance clearer and more efficient without lowering the main ambitions of the directives,\u201d a company spokesperson told Sustainable Views.<\/p>\n There was a demand from the US to delete climate plans, and the climate plans have gone<\/p>\n Inter Ikea underlined the importance of climate transition plans \u201cas they give companies a practical tool for contributing to the EU\u2019s climate targets\u201d.<\/p>\n Claus Teilmann Petersen, stakeholder engagement and human rights manager at Danish clothing company Bestseller, whose brands include Jack & Jones and Vero Moda, said his company supports the original CSDDD text and its alignment with OECD and UN due diligence guidance. \u201cThe omnibus will dramatically reduce the number of eligible companies and water down requirements,\u201d he said. <\/p>\n Warborn\u2019s \u201cSME shield\u2009.\u2009.\u2009. blocks efficient and effective due diligence, leading to more adverse impacts than had the directive not been introduced in the first place\u201d, said Teilmann Petersen. <\/p>\n We Mean Business Coalition director of net zero finance Jane Thostrup Jagd said the vote was \u201cdeeply disappointing\u201d. Companies \u201cneed stability and predictability to operate effectively\u201d, she told Sustainable Views. \u201cUncertainty is poison for businesses and, ultimately, for their competitiveness.\u201d <\/p>\n If the proposed \u201cheavy reduction\u201d in the number of companies covered by the CSRD is adopted, \u201cone must ask whether there will be a sufficient universe of reporting companies for investors and other capital providers to allocate capital responsibly. This would weaken their ability to identify the winners of tomorrow \u2014 and to generate returns,\u201d said Thostrup Jagd. <\/p>\n In October, a letter from the chief executives of TotalEnergies<\/a> and Siemens to French President Emmanuel Macron and German Chancellor Friedrich Merz suggested that \u201cCEOs call for the full abolishment of CSDDD as a clear and symbolic signal\u201d. It was signed by TotalEnergies and Siemens \u201cin the name\u201d of 46 CEOs participating in the 2025 Franco-German business meeting in Evian, France.<\/p>\n Since then, the Business & Human Rights Resource Centre and Social LobbyMap have asked another five French and five German companies represented at Evian whether it is their company\u2019s position \u201cto call for the full abolition of the CSDDD\u201d.<\/p>\n