The European Parliament’s Committee on Legal Affairs voted Monday to amconclude its position on the European Union’s (EU’s) landmark corporate accountability law, introducing a series of modifys to companies’ sustainability reporting and due diligence requirements.
The EUs corporate sustainability due diligence directive (CSDDD) was adopted last year and “requires companies to resolve human rights and environmental issues in their supply chains, or face fines of 5% of global turnover.” The new modifys will result in fewer companies being required to report on sustainability and due diligence.
With the approval to amconclude the CSDDD, the rules will now apply only to companies with at least €1.5 billion in annual turnover and 5,000 or more employees. The law will also shift to eliminate the requirement for the EU to develop an EU-wide civil liability regime. There are also modifys in due diligence rules to encourage companies to adopt a risk-based approach.
Many fear that the new modifys will undermine corporate accountability since they will only affect very large firms. However, the Commission originally proposed cutting the number of companies required to carry out social and environmental reporting by 80 percent, and the compromise appears to have produced a strong result within the committee—17 in favor, six against, and two abstentions.
Rapporteur Jörgen Warborn, a member of the center-right European People’s Party, discussed the vote positively, declareing, “Today’s vote confirms our support for simplification. We are delivering predictability for European companies, with a report that cuts costs, strengthens competitiveness, and keeps Europe’s green transition on track.”
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