European Parliament Advocates for Enhanced ESG Reporting Standards: Stricter Requirements Ahead

The recent proposal by the European Parliament’s Committee on Economic and Monetary Affairs (ECON Committee) to scale back sustainability reporting and due diligence obligations could significantly affect thousands of companies across the European Union. This move, aimed at easing compliance burdens, raises questions about the future of corporate ESG (Environmental, Social, and Governance) regulations.

Overview of Proposed Changes to ESG Regulations

According to a draft amendment report reviewed by ESG Today, the ECON Committee’s proposals extend beyond the European Commission’s recent Omnibus I package, which sought to reduce regulatory burdens for businesses within the EU.

Key Highlights of the Omnibus I Package

• The Omnibus I package proposed restricting the Corporate Sustainability Reporting Directive (CSRD) to companies with more than 1,000 employees and €50 million in turnover.
• This change could exempt approximately 80% of the companies currently impacted by the CSRD.
• Similarly, a 1,000-employee threshold was also suggested for the Corporate Sustainability Due Diligence Directive (CSDDD).

ECON Committee’s Draft Amendments

The ECON Committee proposes even stricter thresholds, aiming to limit the applicability of the CSRD and CSDDD to companies with over 3,000 employees and €450 million in annual revenues. This adjustment aims to simplify compliance processes and reduce administrative burdens on EU firms.

Changes in ESG Disclosure Requirements

In addition to the revised thresholds, the draft amendments also focus on the depth of ESG disclosures:

• The ECON draft suggests capping mandatory data points at 100 and voluntary data points at 50 under the European Sustainability Reporting Standards (ESRS).
• The requirement for companies to adopt a climate transition plan under the CSDDD has been proposed for elimination, as the CSRD already mandates such plans.

The Broader Implications for EU’s Sustainability Agenda

This proposal highlights a growing divide within EU institutions regarding the future of corporate ESG regulation. Recent debates have showcased differing perspectives among parliamentarians:

• Some call for a complete repeal of the CSRD and CSDDD.
• Others express concern that the Commission’s own proposals already weaken oversight too much.

If adopted, these changes could signify a major retreat from the EU’s sustainability policy agenda, potentially undermining its leadership in corporate ESG disclosures. For further insights, you can read the full article on RegTech Analyst.