Even though the European Environment Agency’s latest report concludes that the EU will miss most of its targets by 2030, the EU is currently cutting back on projects and regulations included in the Green Deal. Recently, the CSRD and CSDDD, which have been amended as part of the ESG regulatory framework, have attracted more attention. The criteria for reporting requirements have been significantly increased, meaning that significantly fewer companies will be affected than was initially assumed.
In future, the CSRD will only cover companies which:
Capital market-oriented SMEs are excluded from the mandate. At the same time, a value chain cap will be introduced to protect companies with fewer than 1000 employees from the excessive passing on of reporting obligations within the supply chain. This significantly reduces the indirect impact on smaller companies.
The CSDDD will also be significantly streamlined. In future, it will only apply to companies with
Several key elements will be removed, including the obligation to draw up climate transition plans and the originally envisaged harmonised EU-wide civil liability. Rather than conducting a comprehensive review of the entire value chain, companies will now be required to manage their due diligence in a risk-oriented manner.
As a result of discussions between the Council and the European Parliament, two review clauses have now been included. They are intended to ensure that the necessary targets are still met despite the reduced scope of application. If the Commission concludes by 2029 that the CSRD as it currently stands is insufficient, its scope could be further extended in 2031.
For the CSDDD, as well, plans are in place to review whether more companies should be included again by 2031.
As part of these changes to reporting requirements, voluntary sustainability reporting for small and medium-sized companies (VSME) is to be strengthened as well. The Commission intends to use VSME as a basis for voluntary sustainability reporting and to enshrine it in a delegated act.
These finalised directives provide for a significant streamlining of content and a much smaller scope than was originally planned. At the same time, the review clauses embedded in the omnibus package show that the EU has deliberately left room for requirements to be tightened again at a later date. This creates a dynamic regulatory framework that could once again become significantly more demanding in the future.
myclimate recommends that companies that do not have to report should still opt for voluntary reporting. VSME creates trust through transparency for stakeholders, improves competitiveness and at the same time enhances practicability.
