BREAKING NEWS: Competitiveness and Deregulation: EU Promotes Industry and Slashes Sustainability

The EU has released its highly anticipated Omnibus simplification of key elements of the Green Deal, including the Corporate Sustainability Due Diligence Directive (CSDDD), the Corporate Sustainability Reporting Directive (CSRD), and the Taxonomy.

It confirms the worst fears of sustainability experts who saw a leaked draft of the Omnibus over the weekend. Many of the sustainability commitments and reporting requirements have been stripped away to reduce the burden on business and to improve the competitiveness of European industry.

The scope of CSRD is aligned with that of CSDDD, which removes approximately 80% of the companies that were previously considered in scope and focuses reporting obligations on only the largest companies. It postpones sustainability reporting requirements for companies currently in scope until 2028 and significantly reduces reporting for the EU Taxonomy while making much of the reporting voluntary. It streamlines the European Sustainability Reporting Standards (ESRS) used for CSRD reporting and eliminates sector-specific standards. It also simplifies the “Do No Significant Harm” (DNSH) criteria related to preventing pollution from the use and presence of chemicals.

CSDDD’s reach is significantly narrowed. It will focus only on direct business partners in the supply chain and reduce the frequency of due diligence assessments from one year to five years, allowing for ad hoc assessments when necessary. Sustainability due diligence requirements for large companies are postponed until 26 July 2028. The directive also limits the amount of information large companies can request from small companies, removes civil liability conditions, and severs the link between penalties and net turnover.