The majority of EU-based businesses support retaining more substantial and broadly applied sustainability reporting and due diligence rules than envisioned under the European Commission’s Omnibus simplification proposals, including a lower threshold for companies covered by the regulations and mandatory transition plans, according to a new survey published by climate think tank E3G, and conducted by global research data and analytics group YouGov.
For the report, YouGov surveyed more than 2,500 businesses across Germany, France, Italy, Poland, and Spain, including 1,988 SMEs with less than 250 employees, 170 companies with 250-999 employees, and 385 large companies with more than 1,000 employees.
The survey comes as lawmakers in Europe continue to debate the final shape of the Omnibus I package, which proposes major changes to a series of regulations including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and is aimed at reducing the regulatory burden on companies.
The survey found, however, that despite the reporting and due diligence burdens, many companies see value in the sustainability regulations, with companies being nearly three times as likely to agree than to disagree that becoming more environmentally sustainable is good for their competitiveness, and larger companies being even more likely to agree, and more than two thirds agreeing that the EU should set a global example for sustainability standards in business practices, compared with only 10% who disagreed.
Among the most significant changes included in the package is a proposal to remove the majority of companies from the scope of the CSRD regulation, moving the regulation to cover only companies with more than 1,000 employees from the current 250 employee threshold, and to substantially reduce amount of reported information required by the regulation, and to focus the CSDDD’s due diligence requirements primarily at the level of direct business partners. The proposal also aims to significantly limit the amount of information businesses can request from smaller companies in their supply chains. Some lawmakers have proposed even higher company size thresholds for the regulations, and to remove requirements for companies to adopt climate transition plans.
According to the survey, however, businesses in Europe generally support retaining many of the aspects of the regulations that are likely to be removed through the Omnibus initiative. For example, the survey found that a large majority – 70% – believe that the minimum company size threshold for mandatory sustainability reporting should be 1,000 employees or less, with half favoring 500 employees or less, and only 15% selecting a threshold above the 1,000 employee level. Similarly, six out of ten respondents supported sustainability reporting for their company, if the reporting requirements are proportionate to the business size and the data is meaningful, including well over half of SMEs and 70% of companies between 250 and 999 employees.
Notably, more than half of companies across all size categories agreed that large companies should be allowed to request relevant sustainability data from smaller suppliers, as long as it is proportionate.
The survey also found that businesses see value in strong due diligence rules, with most companies across all size categories agreeing that they would likely lead large companies to favor suppliers from the European Economic Area over non-European companies. Companies with supply chains outside the EU were the most likely to agree, at 62%, with only 13% disagreeing.
Regarding transition plans, 63% of respondents said that they believe that it is fair for large companies to be required to implement a plan to transition to a green economy.
Additionally, while the Omnibus initiative is looking to largely restrict sustainability due diligence requirements to direct supply chain partners, indirect businesses further up the supply chain was the area most commonly cited as a source of human rights or environmental risks, at 41%, compared with only 18% citing direct business partners as the key risk source.
Jurei Yada, Director and Head of EU Sustainable Finance at E3G, said:
“Policymakers are operating under the false assumption that businesses want to get rid of sustainability obligations. This survey blows that narrative out of the water. European businesses don’t see sustainability as red tape or a box-ticking exercise but a genuine driver of competitiveness, and an area where businesses and EU policymakers should lead the charge globally.”
Click here to access the survey.
