Challenges in the EU CSRD Legislative Process

Jörgen Warborn’s press conference on the #Omnibus revealed a number of misguided assumptions behind the proposed “simplification” of the #CSRD and #CSDDD. Here are some of the key ones 👇 🔹 “The scope is well-balanced.” Mr Warborn said: “I think we have a very good balance with the scope that we have in CSRD now.” The assumption: exempting 90% of companies strikes the right equilibrium between simplification and information needs. The reality: investors, businesses, academics, and the ECB have warned that such a narrow scope (even much below the NFRD) undermines the availability of sustainability information. 🔹 “Voluntary action will fill the void.” When asked about the lack of data available to investors, Mr Warborn replied: “There is always a voluntary possibility for companies, that would like to have the capital, to provide information.” But voluntary sustainability reporting cannot fill systemic information gaps. You cannot regulate by wishful thinking... 🔹 “Plans without actions work.” On climate transition plans, he said: “You have to show that you have them, but not what you actually need to do.” In other words, companies must adopt a plan, but not include implementation measures. That turns transition plans into box-ticking exercises, not tools for real change. Having a transition plan without actions is a bit like cooking with a recipe but without ingredients. 🔹 “Corporate complaints weigh more than accountability.” Mr Warborn argued that one reason to drop EU-wide civil liability was because “you had complaints by companies and a lot of resistance for investing in Europe.” Apparently, corporate discomfort outweighs citizens’ right to a harmonised and strong EU-wide civil liability regime. 👉 These four assumptions are deeply problematic. They show why the current “simplification” debate risks misleading both businesses and citizens. Again: simplification itself isn’t the issue. It’s the kind of simplification being pursued, and the assumptions behind it.

After reviewing several reports and discussing them with practitioners inside the community, one thing is clear: the reality of CSRD implementation doesn’t always match our expectations. Here are some of the points highlighted: 🔹 Materiality assessments: a black box? We expected clear methodologies, thresholds, and explanations. Instead, some reports don’t justify why certain topics were omitted, and even companies in the same industry identified completely different priorities—without any explanation. 🔹 IROs: vague, inconsistent, and buried in text In some reports, figuring out what the actual impact is feels like for a needle in a haystack. Instead of a clear statement, IROs are buried in beautifully worded paragraphs that make it hard to pin down what the company is actually disclosing. There’s little transparency on how IROs were assessed, how they tie to the value chain, or which ESRS standard and topic they link to. 🔹 Auditors: pushing hard… or letting things slide? Companies felt heavy pressure from auditors, with strict requirements and deep documentation demands. But then, we see reports missing critical disclosures or providing vague assessments, while still getting assurance. A huge disconnect. 🔹 Governance: where did it go? One of the biggest surprises was that some companies spent pages explaining how important governance is, only to declare it not material and skip the disclosures. Makes no sense. 🔹 Positive impacts misinterpreted Some companies reported mitigating negative impacts as positive impacts, even though ESRS clearly says they’re not the same. How did this get past assurance? 🔹 Value chain assessments: missing or unclear Some reports barely touch on value chain assessment, even though ESRS requires it. Companies state whether an issue occurs upstream, in operations, or downstream, but without explaining how they assess it, who are value chain actors etc. 🔹 Entity-specific topics: strategic move or a loophole? Some companies introduced entity-specific topics instead of using ESRS categories. In some cases, it made sense. However, in others, it feels like a way to avoid reporting on required topics by shifting disclosures into custom labels. Some even skipped ESRS-defined subtopics while reporting on something nearly identical under their own label. 🔹 No common structure Without standardized tagging, reports are all over the place. Some are well-organized, others are a mess, burying key details. Even within the same industry, comparing reports is a struggle. I’ve already been criticized for focusing only on the negatives, but without understanding what’s wrong, we can’t figure out what right looks like. Want to know more? Join our ESG community for deeper insights.

We are at a critical moment for sustainability reporting. Next Monday, the consultation on the CSRD's new drafts closes and by the end of the year the European Commission will have everything in its hands to update the CSRD. Is it going to be stripped down to meaninglessness or improved into a streamlined and more relevant tool to support the sustainable transition of companies? As explained in previous posts, the current Corporate Sustainability Reporting Directive (CSRD)'s "exposure drafts" are promising, even though some loopholes may lurk in the details of the text. It is very important that many stakeholders explicitly call for double materiality and mandatory datapoints on a range of topics to be kept in the CSRD. A number of lobbies will push back against an ambitious CSRD and they need to be countered. At The Biodiversity Footprint Intelligence Company (BioInt), we have thus decided to share our answers to the ongoing consultation so that others could use them to feed their own feedback. Here are the key points (details in the document attached): - Maintain the - critical - principle of double materiality - Explicitly reference the Nature Positive Initiative' s“site condition” and “landscape condition” indicators (and not just present them as examples) - Close a loophole which could allow companies not to report on sites that are material for biodiversity - Include explicitly freshwater ecosystems in the scope of impact metrics - Re-instate selected supply-chain-related data points as most impacts occur in the value chain (currently not covered!) - Align biodiversity & ecosystem targets with the Science Based Targets Network (SBTN) to some extent The voluntary datapoints have been removed from the standard and are not covered by the consultation. Hopefully, this is an opportunity to provide regularly updated and stronger guidance on them in the near future. We included feedback on some voluntary datapoints at the bottom of our document. 💬 What key points am I missing? Still time to update our feedback by Monday!

European Parliament (EP) flexed its muscle yesterday, sending signals that the political future of the US-EU trade agreement may not be smooth sailing. On October 22, the European Parliament voted down the Omnibus Simplification Package, changes to two EU’s sustainability rules, the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). ➡️ This package narrowed who and what needed to be reported, while also extending the deadlines for implementation. ➡️ Large companies operating in the EU would be required to report on human rights and environmental risks in their global supply or value chains. Conducted via secret ballot, the vote was 309 for/318 against. On social media, MEPs indicated they voted "no" for contradictory reasons - some opposed the watering-down of Europe's Green Deal, while others thought it didn't go far enough to boost industrial competitiveness. The EP will now amend and try to re-pass the legislation on November 13, then reopening negotiations with European national governments to find a compromise. Work on this package started in spring 2025, reflecting concerns that the rules created burdensome requirements that undermine European competitiveness. In fact, German and French leaders called for the law to be completely scrapped in May and June. By August, the EU committed to undertake efforts to ensure these rules do not pose undue restrictions on transatlantic trade as part of the US-EU Framework Trade Deal. The US continues to press for repeal or significant changes, issuing a joint letter with Qatar before the vote, arguing the directive could jeopardize natural gas trade and broader energy partnerships with Europe. 🔁 The EP has flexed its muscles to demonstrate it is not merely a rubber-stamp on the priorities of the big Member States nor the European Commission. The rejection of the Omnibus Simplification Package is more than a procedural hiccup—it’s a signal of deeper tensions within Europe over how to balance sustainability, competitiveness, and strategic alignment with the U.S. As the November 13 vote approaches, all eyes will be on whether Brussels can reconcile these competing priorities. German Marshall Fund of the United States #TransatlanticRelations #EnergySecurity #RegulatoryPolicy #Geopolitics https://lnkd.in/evHxC3MG

📢 New analysis on the leaked EU Omnibus Proposal – What will be the planetary price of simplification? Can Europe combine sustainability and competitiveness? Big changes are certainly coming to the EU’s sustainability reporting landscape. A leaked draft of the European Commission’s Omnibus Proposal suggests major rollbacks in the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy Regulation. 💡 To help navigate these changes, our put together a comparison table—let us know if it’s useful! Here are some highlights of what’s being proposed: 🔹 𝗖𝗦𝗥𝗗 𝘁𝗵𝗿𝗲𝘀𝗵𝗼𝗹𝗱 𝗿𝗮𝗶𝘀𝗲𝗱 – Only companies with 1,000+ employees and €450M turnover may need to comply (previously 250 employees, €40M). This scopes out 85% of firms previously covered. 🔹 𝗦𝗲𝗰𝘁𝗼𝗿-𝘀𝗽𝗲𝗰𝗶𝗳𝗶𝗰 𝘀𝘁𝗮𝗻𝗱𝗮𝗿𝗱𝘀 𝘀𝗰𝗿𝗮𝗽𝗽𝗲𝗱 – Industry-specific ESG reporting rules may be permanently shelved. 🔹 𝗗𝘂𝗲 𝗱𝗶𝗹𝗶𝗴𝗲𝗻𝗰𝗲 𝘄𝗲𝗮𝗸𝗲𝗻𝗲𝗱 – Companies only need to assess direct suppliers, not the full supply chain. 🔹 𝗖𝗶𝘃𝗶𝗹 𝗹𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗿𝗲𝗺𝗼𝘃𝗲𝗱 – Under CSDDD, firms won’t face legal consequences for failing to meet sustainability obligations. 🔹 𝗧𝗮𝘅𝗼𝗻𝗼𝗺𝘆 𝗿𝗲𝗽𝗼𝗿𝘁𝗶𝗻𝗴 𝗺𝗮𝘆 𝗴𝗼 𝘃𝗼𝗹𝘂𝗻𝘁𝗮𝗿𝘆 (not directly mentioned in the leak) – Instead of mandatory reporting, firms could opt-in, aligning with corporate lobbying efforts. ⚖️ I am wondering about if this is simplification or just plain deregulation. In addition, what will the effects be of a watered-down EU Green Deal for the bloc's sustainability leadership and for firms that have already invested in reporting? How do you see the balance between competitiveness and sustainability? Can we reduce red tape and still protect the planet? Drop your thoughts below! 👇 #CSRD #CSDDD #EU #Sustainability #ESG #SustainabilityReporting #ESGRegulation #Climate #Finance #CorporateResponsibility