The European Parliament’s Committee on Economic and Monetary Affairs (ECON Committee) may propose significant reductions in the number of companies required to comply with the EU’s sustainability reporting and due diligence regulations, going well beyond the cuts proposed by the EU Commission’s Omnibus plan, according to a draft amendments report seen by ESG Today.
The draft proposals follow the release in late February of the Commission’s Omnibus I package, aimed at significantly reducing the sustainability reporting and regulatory burden on companies, with proposals for major changes to a series of regulations including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), as well as the Taxonomy Regulation, and the Carbon Border Adjustment Mechanism (CBAM).
Key proposed changes to the CSRD in the package include a dramatic reduction in scope, moving the regulation to cover only companies with more than 1,000 employees and either revenue greater than €50 million net turnover, removing an estimated 80% of companies from the regulation’s sustainability reporting requirements. The 1,000 employee threshold would match that of the CSDDD.
In the new proposal, however, the ECON Committee draft would amend the omnibus package by raising the threshold for the CSRD and CSDDD to 3,000 employees and €450 million in annual revenues, cutting the number of companies covered by the regulations even more significantly. In its justification for the amendment, the report said that the changes would align with “the declared objectives of simplification and reducing the reporting burden for EU companies.”
The draft amendments also propose strict limits to the sustainability information to be reported by companies still subject to the CSRD. While the Omnibus proposal aims to reduce the number of data points included in the CSRD’s underlying European Sustainability Reporting Standards (ESRS), the report proposes limiting the number of mandatory ESRS data points to 100, and voluntary data points to 50.
The draft report also removes the CSDDD’s obligation for companies to adopt a climate transition plan, noting that companies are already required to do so under the CSRD.
The proposals highlight the challenges facing Parliament in coming to an agreement on the Commission’s Omnibus proposals, with initial debates on the package in March indicating a lack of consensus, with positions ranging from scrapping the CSRD and CSDDD altogether to pushing back substantially on the reductions proposed in the package.
