The European Commission is being urged to resist pressure to unpick its sustainability-related disclosure and due diligence rules.
In response to recent news that Ursula von der Leyen plans to re-open and reduce three key European Union laws, nearly 100 NGOs, think tanks and membership bodies have today written to the Commission president.
“Instead of playing ping-pong with the legal framework, we strongly encourage focusing on smart and easy implementation and consider the current lack of key data relevant for the economic transformation,” said the group, which includes Germany’s Association of Ethical Shareholders, the Interfaith Center on Corporate Responsibility, and the Investor Alliance for Human Rights.
Under pressure from German and French politicians and industry bodies, von der Leyen has committed to revisit the Corporate Sustainability Reporting Directive, the Taxonomy Regulation and the Corporate Sustainability Due Diligence Directive (CS3D).
Given recent political shifts across Europe and the US, there are concerns that allowing any kind of renegotiation of already-agreed sustainability laws will open the door to a complete rethink of the agenda.
When the Commission asked Parliament to approve a delay to the EU Deforestation Regulation recently, centre-right members of Parliament (MEPs) used the opportunity to add more aggressive amendments to the proposal to reduce the legislation’s scope and ambition.
The move was roundly rejected by the Council, but observers are not convinced the same thing would happen if CSRD, CS3D and the Taxonomy were opened up in 2025.
A campaign against CS3D has already reportedly been kicked off by US politicians, hopeful that incoming president Donald Trump will move to stop the law applying to any US companies.
Today’s letter argued that “EU standards provide a one-stop shop for companies to issue information needed by banks and investors (including all necessary alignment with SFDR and Taxonomy)”.
“Any arbitrary change or cut in the standards would risk confusing the market, and demand more efforts from companies which are already investing in the application of the EU standards,” it added.
The group also pointed out that, just like sustainability disclosures, financial reporting can be complex, duplicative and costly for companies. It said that, if the Commission genuinely wants to reduce the reporting burden on European firms, it should therefore seek to pare back both types of requirements, rather than focusing solely on environmental and social rules.
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