The Council of the European Union could adopt the negotiating position of the EU27 as early as next week on the ‘omnibus’ text simplifying the CSRD and CSDDD directives on corporate sustainability and due diligence (see EUROPE 13652/22). To achieve this, the Polish Presidency of the EU Council proposed yet another compromise to Member States, on Tuesday 17 June, of which Agence Europe has received a copy, proposing to exclude even more companies from the legislative framework. On Wednesday 18 June, Member States’ permanent representatives to the EU found common ground on most of the issues that had been under discussion in recent weeks, according to a source.
Scope. The obligations of the directive on due diligence would only apply to companies with more than 5,000 employees and a turnover of more than €1.5 billion, according to the latest proposal from the Polish Presidency. This is a major change from the Commission’s text, which set a threshold of 1,000 employees and a turnover of €450 million.
The challenge for the Polish Presidency is to meet the demands of a number of Member States which are now rejecting the CSDDD directive outright.
Transition plan. Companies’ obligations to maintain a climate transition plan have also been relaxed. For example, the managers of the companies concerned will no longer be required to use their “best efforts” to draw up their transition plan, but rather “reasonable efforts”.
In the same vein, these action plans will have to “contribute to”, rather than “be compatible with”, the transition to a sustainable economy and the limiting of global warming.
According to the Polish Presidency of the Council, these revised obligations appear to be more proportionate.
Due diligence in the value chain. The latest compromise is broadly in line with the Commission’s proposal: the obligations to monitor the harmful effects of activities on the environment and human rights are limited to direct partners.
In order to win over the countries in favour of ambitious due diligence, the Polish Presidency is proposing to add an review clause, with a view to potentially extending the obligations beyond direct partners in the future.
Civil liability. The Commission’s proposal to remove legal remedies at European level is maintained in the latest Polish proposal. Finally, with regard to the deadline for Member States to transpose the CSDDD Directive, the Council is expected to call for a further year’s postponement, in addition to the postponements already agreed under the ‘Stop the Clock’ Directive.
See the preparatory note for the discussion: https://aeur.eu/f/hei
See the 17 June compromise: https://aeur.eu/f/hej (Original version in French by Léa Marchal)