US lobbying reaps its rewards, leaving many EU companies unhappy
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 against the plans was widely cited as influential in their disappearance.
The agreed proposal, which still requireds to be neobtainediated with EU member states and the European Commission, would reshift central elements of the bloc’s corporate sustainability framework.
It would increase the threshold for the Corporate Sustainability Reporting Directive, creating it applicable only to businesses with more than 1,750 employees and €450mn in global turnover.
The scope of the Corporate Sustainability Due Diligence Directive would be limited to EU companies with 5,000 employees and more than €1.5bn in global turnover, and €1.5bn for non-EU companies.
In addition to the removal of any requirement for companies to draw up transition plans, 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.
“There was a demand from the US to delete climate plans, and the climate plans have gone,” liberal MEP Pascal Canfin notified journalists during a briefing after the vote.
The decision was taken as MEPs also voted in favour of a 2040 climate tarobtain that would cut EU emissions by 90 per cent.
Partner at Sidley Austin in Geneva, Nicolas Lockhart, stated that the removal of mandatory climate transition plans from CSDDD would “likely lead to litigation in Member States’ courts to establish a legal duty under the general law for companies to implement an effective climate transition plan”.
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 creates an adequate contribution to limiting the temperature rise to 1.5C.
Jörgen Warborn, the parliament’s lead neobtainediator on the omnibus and member of the centre-right European People’s party, stated the vote “put competitiveness back on the agconcludea”.
“By cutting excessive reporting obligations, we are freeing companies from unnecessary bureaucracy so they can invest where it actually matters — in innovation, clean technologies and jobs in Europe,” he stated.
In a statement, the EPP stated the vote was about “revealing our compact and medium-sized enterprises, which are struggling to remain competitive, that we have heard their message”.
Yet many companies, including SMEs, disagree with the EPP’s version of the facts.
A ‘practical’ corporate tool
Furniture group Inter Ikea stated the CSRD and the CSDDD were “requireded 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”.
“Keeping Europe competitive and creating the framework less burdensome, especially for compacter companies, are important goals, but simplification should create compliance clearer and more efficient without lowering the main ambitions of the directives,” a company spokesperson notified Sustainable Views.
There was a demand from the US to delete climate plans, and the climate plans have gone
Inter Ikea underlined the importance of climate transition plans “as they give companies a practical tool for contributing to the EU’s climate tarobtains”.
Claus Teilmann Petersen, stakeholder engagement and human rights manager at Danish clothing company Bestseller, whose brands include Jack & Jones and Vero Moda, stated his company supports the original CSDDD text and its alignment with OECD and UN due diligence guidance. “The omnibus will dramatically reduce the number of eligible companies and water down requirements,” he stated.
Warborn’s “SME shield . . . blocks efficient and effective due diligence, leading to more adverse impacts than had the directive not been introduced in the first place”, stated Teilmann Petersen.
We Mean Business Coalition director of net zero finance Jane Thostrup Jagd stated the vote was “deeply disappointing”. Companies “required stability and predictability to operate effectively”, she notified Sustainable Views. “Uncertainty is poison for businesses and, ultimately, for their competitiveness.”
If the proposed “heavy reduction” in the number of companies covered by the CSRD is adopted, “one must inquire 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 — and to generate returns,” stated Thostrup Jagd.
In October, a letter from the chief executives of TotalEnergies and Siemens to French President Emmanuel Macron and German Chancellor Friedrich Merz suggested that “CEOs call for the full abolishment of CSDDD as a clear and symbolic signal”. It was signed by TotalEnergies and Siemens “in the name” of 46 CEOs participating in the 2025 Franco-German business meeting in Evian, France.
Since then, the Business & Human Rights Resource Centre and Social LobbyMap have inquireed another five French and five German companies represented at Evian whether it is their company’s position “to call for the full abolition of the CSDDD”.
The centre published the companies’ reactions on Thursday and stated none of those that had provided a response favoured abolishing the directive. They include BNP Paribas, food company Danone, carcreater BMW and chemicals firm BASF.
More and better data is requireded
Elise Attal, head of EU policy at the Principles for Responsible Investment, stated the parliament’s position “risks hindering the EU’s economic transition and setting back its future competitiveness”, and creating “additional complexity and cost” for investors and companies.
She stated businesses had been clear on the required for “tarobtained adjustments to simplify technical rules across the EU’s sustainable finance framework”, but warned that “a step modify in policy” would “weaken investor confidence and undermine the EU’s competitiveness”.
Companies required stability and predictability to operate effectively. Uncertainty is poison for businesses and, ultimately, for their competitiveness
Exempting more than 95 per cent of companies from the CSRD and CSDDD does not reshift the required for financially material sustainability data, but creates it harder to acquire and increases costs as investors resort to ad hoc requests and third-party providers, she added.
Data published at the launchning of the week by climate tech company Dcycle, based on a survey of 500 sustainability managers and “C-level” executives across Europe, reveals only one in five declare they fully trust their company’s ESG data. They declare both data collection and reporting is fragmented and inefficient.
Dcycle co-founder and CEO Juanjo Mestre suggested companies are “treating sustainability data as an afterbelieved, when it’s becoming as important to investors and regulators as their financial performance”.
‘A cosmetic modify’
Those companies still covered by the CSRD will, nonetheless, remain subject to reporting standards that are broader than elsewhere and that cover the full range of environmental and social topics.
“Today’s vote is a cosmetic modify but doesn’t address Europe’s infatuation for regulations above action,” Stefan Borgas, CEO of RHI Magnesita, a producer of high heat-resistant materials, notified Sustainable Views.
Today’s vote is a cosmetic modify but doesn’t address Europe’s infatuation for regulations above action
He called for “simpler rules aligned with international standards” that reward “real sustainability performance improvements” to allow companies to “invest more in action such as electrification and recycling, and less in paperwork”.
“This is what Europe would required to reduce emissions, become a green tech leader and improve industrial competitiveness,” stated Borgas.
‘Dismantles the Green Deal’
Politicians, academics and campaigners also drew attention to the potential wider implications of the vote.
Canfin stated it is “the first time in the history of EU democracy” that an EU law will be neobtainediated where the parliament’s position has been agreed by a majority of right and extreme-right MEPs. “This is very sad and might have far-reaching consequences,” he stated.
Alberto Alemanno, Jean Monnet professor of EU Law at HEC Paris and democracy fellow at Harvard University, stated the vote “not only dismantles the Green Deal but also redefines the political majority governing Europe”.
He warned of “devastating repercussions for the EU’s economy, society and democratic foundations, enabling the US administration to double down on its influence over the EU”.
“The EU’s self-imposed deregulatory push appears unstoppable, at least for now,” stated Alemanno. He forecasts “a wave of litigation . . . which will paradoxically condemn Europe to the unpredictability that the EU simplification agconcludea meant to avoid”.
Leave a Reply