Omnibus: the consequences of rushed and unsubstantiated policy-making

If confirmed, the following changes would render the EU’s push for corporate sustainability essentially meaningless:

• ‍Destroying the risk-based approach in CSDDD by requiring companies to focus on direct partners and large suppliers only. This contradicts the Directive’s objectives of preventing a race to the bottom in global value chains and will undermine companies’ best practice, such as the efforts of the textile, mining or cocoa industry to address child labour, forced labour and other severe issues in their upstream value chains.

• Lifting the requirement of businesses to implement climate transition plans without any proper impact assessment or evidence being presented as to what effect this will have on the green transition. In light of the increasing scientific consensus on how corporate decarbonisation pathways have to follow suit, the EU Commission seems to be caving into the oil and gas industry and simply deregulating on their request. ‍

• Removing 85-90% of companies from CSRD without providing them with proportionate standards. This will drastically reduce the availability and reliability of sustainability data and will penalise the tens of thousands of companies that have already started implementation of the CSRD, sending a clear message that sustainability data will have no bearing on their future success. Such a massive reduction of ESG data collection also annihilates the business case for digital solutions that use ESG data to drive companies’ strategy and efficiency. This blank removal of all mid-cap companies is in direct contrast with the recommendation featured in the Draghi report and hinted by the Commission to create a simplified reporting framework for small mid caps, a proposal explicitly supported by governments in France, Italy and Spain as well as national accounting authorities.

• ‍Forbidding companies from asking their suppliers outside of CSRD scope for any ESG information besides a limited number of KPIs in a voluntary standard that was originally written for the very small companies. CSRD could specify that companies are not required to obtain primary information from small companies, but banning access to this information is unconstitutional and violates contractual freedom. Such provision could be even abused for legal harassment of companies who already conduct sustainability due diligence, by their unscrupulous competitors, including Chinese firms.

• ‍Taking away the EU’s power to clarify the sector-specific disclosures needed to simplify  companies’ materiality assessment. This move demonstrates how the EU is bowing to international and US pressure to follow ISSB and SASB standards, which do not address impact-related aspects of sustainability. The Commission is effectively proposing to relinquish the EU's sovereignty in sustainability standard setting.

Weakening agreed legislation before full implementation is reckless. It will not only harm the environment and human rights, but also strip European companies of the ability to prepare for a more resilient, competitive future. We urge the European Commission to resist short-term pressure, uphold the reporting and due diligence legal frameworks and defend Europe’s leadership, for the sake of its businesses, consumers and global credibility.

Upcoming webinar - EU Omnibus Unveiled: Key implications for CSDDD, CSRD, and EU Taxonomy

This Friday, 28 February at 11:00 CET, we invite you to join us for a webinar where we will take a first dive into the key elements of the European Commission’s omnibus proposal, aiming at “simplifying” key laws for sustainable finance, corporate due diligence, and sustainability reporting.

Event Details:

• Date: 28 February, 11:00 - 12:00 CET
• Language: English
• Click here to register!

Agenda & Speakers:

• Richard Gardiner, Head of Public Policy, WBA: Due Diligence Obligation & Transition Plans
• Marion Lupin, Policy Officer, ECCJ: CSDDD Penalties & Civil Liability
• Mariana Ferreira, Sustainable Finance Policy Officer, WWF EU & Julia Otten, Senior Policy Officer, Frank Bold : CSRD & EU Taxonomy

The session will be moderated by Maria van der Heide, Head of EU Policy, ShareAction. This session is organised by WWF EU, ShareAction, the World Benchmarking Alliance, Frank Bold, and the European Coalition for Corporate Justice.