CSDDD: Parliament lead negotiator’s draft seeks greater deregulation than original

The draft report of potential EU Omnibus amendments submitted by lead negotiator Jörgen Warborn (EPP) deletes transition plan requirements and further reduces the scope of CSDDD.

The document – developed by the Parliament’s largest political group, EPP, and not representative of the entire EU Parliament – has been slammed by sustainability practitioners and opposition leaders: “The goal is clearly to further water down corporate accountability rules,” said World Benchmarking Alliance Strategic Public Policy Lead Richard Gardiner.

In a post on Linkedin, Danish MEP and Vice President of the Greens/European Free Alliance Group Kira Peter-Hansen expressed her shock at what she deemed as “an attempt to deregulate even more than the Commission”.

What does the EPP draft report say?

The main amendments included in the EPP’s draft report are a further reduction of the scope of the Corporate Sustainability Due Diligence (CSDDD) regulation, from companies with 1,000 employees or more to those with 3,000 employees or more (maintaining the turnover threshold of €450 million). 

As a reminder, the first CSDDD draft applied to firms of 500 employees or more (around 16,000 companies), but this was reduced to those of 1,000 employees (around 5,000) in the final text approved by the European Parliament last year. 

The European Commission’s Omnibus proposal maintained the law’s 1,000 employee threshold, but now the EPP is seeking to further reduce the number of firms within the CSDDD’s scope.

Climate transition plan requirements

Beyond this scope reduction, the new draft repeals the requirement for companies to develop and implement a climate transition plan, arguing that it is “disproportionate” and places too heavy an administrative burden on EU firms.

This is despite the need expressed by investors to have access to harmonised transition plan information, as well as the warning by legal scholars that removing the obligation for companies to develop and "put into effect" a climate transition plan could create litigation risks.

The draft also further reduces the value chain due diligence required of companies, swapping the words ‘value chain’ with ‘chain of activities’ – which means all upstream suppliers but just some downstream partners – ‘mapping’ to the more general ‘scoping’ of potential risks, and specifying that due diligence should be “based on reasonably available information”.

Member States prohibited from introducing more stringent requirements

In addition to “watering down” CSDDD, the EPP draft seeks to prohibit Member States from introducing more stringent due diligence requirements for their own companies.

Concretely, the Commission’s draft included a provision that while Member States should not create different due diligence regulations at the national level, they “should be allowed to introduce more stringent or more specific provisions on other aspects, including to address emerging risks linked to new products or services”. This provision has been removed in the Parliament’s latest draft.

Members of Parliament now have until June 26 to submit their amendments.