The European Union has made a controversial decision to weaken its corporate sustainability laws, sparking concern among environmental advocates and investors. The deal, reached after months of pressure from companies and governments, including the United States and Qatar, has been met with criticism from those who argue that it undermines the EU's commitment to sustainability and transparency.
The changes include dropping the requirement for companies to adopt climate transition plans and watering down rules for sustainability reporting. The EU has also increased the threshold for sustainability reporting, limiting it to companies with over 1,000 employees and a turnover of $524 million, down from the previous 50,000 companies with more than 250 employees. For non-EU firms, the threshold is set at 450 million euros in turnover generated within the bloc.
The deal also limits the EU's corporate sustainability due diligence directive (CSDDD) to only the largest EU corporations, which have more than 5,000 employees and annual turnover exceeding 1.5 billion euros. The same rules will cover non-EU companies with turnover in the EU above that level.
The push to weaken the laws had dismayed environmental campaigners, some investors and governments, including that of Spain, which had urged Brussels to keep the rules intact to support European priorities on sustainability and human rights. The United States and Qatar have pressured Brussels to scale back the due diligence law, warning that the rules risked disrupting liquefied natural gas trade with Europe.
Despite the criticism, some EU officials see the agreement as a step towards creating a more favorable business environment. Denmark's European affairs minister, Marie Bjerre, called it an important step towards the common goal of fostering business growth and innovation. However, the deal has raised concerns about the EU's commitment to sustainability and the potential impact on European businesses' competitiveness with foreign rivals.
The EU Parliament and EU countries must each give formal approval for the changes to become law, usually a formality that waves through pre-agreed deals. The deal has sparked a debate on the balance between business growth and environmental sustainability, with many questioning the EU's commitment to its sustainability goals.
