Today, the European Parliament has adopted its negotiating position on the proposal for a Corporate Sustainability Due Diligence Directive (CSDDD). A majority of 366 Members of the Parliament voted in favour of almost all the amendments endorsed by the Committee on Legal Affairs in April, with 225 votes against and 38 abstentions.
The vote reflects cross-party support for an enhanced contribution by businesses to sustainability and a clear mandate for the rapporteur to negotiate with the Commission and the Council.
The Parliament’s proposed amendments reinforce the risk-based approach to due diligence compared to the Commission’s proposal and the Council General Approach, in line with international standards on business and human rights. They also strengthen the provisions on stakeholder consultation and due diligence duties.
The text adopted by the Parliament is a step forward regarding the contribution by the financial sector to more sustainable value chains. Investors will have to work with their investees in order to tackle adverse impacts on human rights and the environment.
Regarding the duty of companies to contribute to climate action, the plenary strengthened the Commission’s proposal to require that companies adopt and implement transition plans. The adopted amendments detail the content of transition plans to ensure that companies contribute to global climate goals. Moreover, Parliament incorporates the proposal by its Committee on the Environment to link variable remuneration to climate transition plans.
On the downside, the final outcome falls short of ensuring a coherent, company-wide implementation of due diligence by requiring oversight by directors. This is crucial in order to prevent compliance departments from operating in a silo. Not requiring the involvement of directors is a key shortcoming of the plenary outcome, including relative to the Commission proposal, which was already only a first step towards clarifying directors’ duties.
By adopting a negotiating position for the European Parliament, the vote in Plenary today concludes the first stage of the legislative process, where the Parliament and the Council adopt their position relative to the initial proposal by the Commission. Now, the three institutions will enter into trilogues to agree on the final shape of the directive. Frank Bold calls on all institutions to prioritise the negotiations for the CSDDD in order to reach agreement on it before the end of the mandate.
In light of today’s State of the Union Address by President von der Leyen and the ‘SME relief package’ presented by the European Commission yesterday, Frank Bold calls on the Commission not to disregard the political agreement reached in 2022 on the Corporate Sustainability Reporting Directive (CSRD).
Last Friday, we submitted our recommendations to the International Sustainability Standards Board (ISSB)’s agenda priorities.
A new study by the Frank Bold expert group analyses the legal regulation of community energy in EU member states down to the practical implementation. In response, it presents seven specific recommendations to improve the legislation of energy laws, as well as the planned implementing regulations.
