On the night of 8-9 December, negotiators from the European Parliament and the Council of the EU reached a provisional agreement on the first ‘Omnibus’ simplification package on corporate sustainability. The Danish Presidency of the Council of the EU wanted to show consistent results in terms of simplification: “This is a great day for European businesses”, welcomed the Danish Minister for Industry, Morten Bødskov, on Tuesday 9 December.
The outcome of the negotiations reflects the dynamics observed in recent months on this issue, i.e. the increasingly marked abandonment of certain sustainability objectives in favour of simplification for businesses.
CSDDD. The European Parliament, for example, has succeeded in abolishing mandatory climate transition plans for companies covered by the Corporate Sustainability Due Diligence Directive (CSDDD).
Civil liability at EU level has also been abandoned, in line with the European Commission’s proposal and the positions of the two institutions.
However, the EU Council was keen to maintain certain elements that Parliament wanted to get rid of: for example, the agreement sets a maximum percentage of turnover (3%) for the financial penalties that would apply to companies that fail to comply with the rules. The European Parliament wanted to remove the reference to an amount.
As regards the monitoring obligations of companies subject to the CSDDD, these will not be limited to direct trading partners, as initially proposed by the Commission, but may be applied in a targeted manner across the value chain - following the “risk-based approach”. In other words, companies will not be obliged to monitor their entire supply chain, but only obvious cases of possible violations of human rights and environmental protection.
The deadlines for transposition and application of the text have been extended once again by the co-legislators: Member States must transpose the directive by 26 July 2028 and companies will start applying it in 2029.
CSRD. The scope of the Corporate Sustainability Reporting Directive (CSRD) is aligned with the EU Council’s position: companies with more than 1,000 employees and an annual turnover of more than €450 million will have to comply with non-financial reporting obligations. The European Parliament decided in favour of an even narrower scope (1,750 employees) (see EUROPE 13751/1).
Reactions. The EPP group in the European Parliament welcomed this rapid agreement on the major issue of simplification. The text’s rapporteur, Jörgen Warborn (EPP, Swedish), said that it responded to the urgent needs of European businesses.
On the S&D side, however, the agreement is a disappointment. “Going back on certain standards does not make Europe more competitive”, regretted René Repasi (S&D, German).
The Renew Europe group had not yet taken a clear position on the outcome of the negotiations on Tuesday 9 December. For the French MEP of this group, Pascal Canfin, there are as many reasons to support the agreement as to reject it at this stage. He regretted the deletion of climate transition plans and European civil liability, but welcomed the obligations across the value chain and the reintroduction of details on fines.
Link to the text of the agreement: https://aeur.eu/f/jxc (Original version in French by Léa Marchal)