Cleerit’s Post

🎉 CSDDD approved in European Parliament! In the last few minutes, the European Parliament voted in favour of the EU Corporate Sustainability Due Diligence Directive (#CSDDD). The word “transformative” is often overused, but in this case, there is no doubt. Unlike most sustainable finance policy developments, this law is not about disclosure, but action. Some may argue, after all the negotiations, the CSDDD has lost its teeth. I’d beg to differ. It’s not perfect, and a much smaller group of companies are in scope of the law than should be. But legislators have made a significant achievement. Many aspects of this law are, or nearly, aligned with the international standards for #duediligence under the UNGPs and OECD Guidelines, which all policy makers should be aspiring to. This directive will pave the way for policy makers worldwide to finally act on not what companies should disclose about sustainability – but what they should actually do, now, to be sustainable. Next steps – the Council must do a final rubber stamp on 15 and 23 May, then the CSDDD will be published in the Official Journal of the EU, to be transposed into national Member State law in the next two years (approximately by September 2026). PRI will publish a briefing note in the next few days – keep your eyes peeled 👀

The Commission calls on 17 Member States to fully transpose the CSRD! ⏰ The European Commission decided to open #infringement procedures by sending a letter of formal notice to 17 Member States, Belgium, Czechia, Germany, Estonia, Greece, Spain, Cyprus, Latvia, Luxembourg, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia and Finland, for failing to notify their national measures transposing fully 📌the Accounting Directive (Directive 2013/34/EU), 📌the Transparency Directive (Directive 2004/109/EC) 📌and the Audit Directive (Directive 2014/56/EU), as amended by the Corporate Sustainability Reporting Directive (#CSRD) (Directive (EU) 2022/2464). The CSRD introduces new rules on #sustainabilityreporting. It requires large companies and listed companies (excluding micro-undertakings) to disclose information on the social and environmental risks they face, and on how their activities impact people and the environment. This helps investors and other stakeholders to evaluate the sustainability performance of companies. The new sustainability reporting rules apply from financial years beginning on or after 1 January 2024. In the absence of #transposition of these new rules it will not be possible to achieve the necessary level of harmonisation of #sustainabilityreporting in the EU and investors will not be in a position to take into account the #sustainability performance of companies when making investment decisions. The 17 Member States concerned have not yet communicated full transposition into national law of the provisions of the CSRD. The transposition deadline expired on 6 July 2024. The Commission is therefore sending letters of formal notice to the concerned Member States, which now have ❗️two months ❗️to respond and complete their transposition. In the absence of a satisfactory response, the Commission may decide to issue a reasoned opinion.

===CSRD transposition : Belgium is part of it!=== The commission starts putting pressure on states that still need to transpose #CSRD in their local frameworks. Deadline was July 2024. Commission gave them 2 additional months to transpose. #esg #sustainability #sustainabilityreporting #esgreporting

After recent uncertainty, EU Member States have voted in favour of the Corporate Sustainability Due Diligence Directive (CSDDD). The preliminary agreement on the law was reached last December after extensive negotiations between the European Commission, EU Council, and the European Parliament. However, in January, Germany's opposition led to delays, with France and Italy seeking last-minute changes, raising concerns about the law's scope. The most significant concession concerned the threshold for companies covered by the Directive, raising it to 1000 employees and €450 million turnover, significantly reducing the number of affected companies. Now, the focus shifts to implementing and building on the agreed-upon framework. The European Parliament must swiftly vote to support the law to move forward with turning words into action. The vote by the Permanent Representatives of Member States will be followed by a vote in the European Parliament’s JURI Committee on March 19th, with the plenary vote expected the week of April 25th. Helpful Links:  https://lnkd.in/eyq9nvSE  https://lnkd.in/emFhctnu #esg #nossadata #csddd

What happens to the countries that are not transposing the #CSRD in time? Countries that fail to transpose the CSRD on time may face EU infringement proceedings, which can lead to fines and legal action by the European Commission. For companies, this creates legal uncertainty, potentially affecting compliance, investor confidence, and market access. Once the law is transposed, businesses may face retroactive compliance, increasing costs and pressure. Additionally, delayed transposition undermines the harmonization of sustainability reporting across the EU, causing inconsistencies between member states. Yesterday, the European Commission has announced that it has sent letters to 17 EU member states, opening infringement proceedings with them over their failure to communicate that they have fully transposed the new Corporate Sustainability Reporting Directive (CSRD) into their national laws. Austria, Belgium, Czechia, Cyprus, Germany, Greece, Estonia, Luxembourg, Latvia, Malta, the Netherlands, Poland, Portugal, Spain, Romania, Slovenia and Finland are among the countries receiving the letters. As of the beginning of 2024, the CSRD is applicable to large public-interest organizations with more than 500 employees, with the first reports being issued in 2025. The next year, companies with 250 or more employees or €40 million in revenue will be required to submit reports, followed by listed SMEs one year later. #EU infringement procedures allow the Commission to take legal action against EU member states that fail to implement EU laws, beginning with a letter of formal notice. As a result of the letter, the Commission may send a reasoned opinion with a formal request to comply with the law, and may then refer the matter to the Court of Justice for review and punishment. States had until July 6, 2024 to transpose the CSRD into national laws, but the Commission said it is still urging 17 states to do so. The 17 member states have two months from the date the Commission sends the letters to respond and complete the transposition. After that, the Commission may issue a reasoned opinion.

In December, I posted on the provisional agreement reached on new EU rules on responsible business conduct to be implemented through the Corporate Sustainability Due Diligence Directive (CSDDD) and noted that it was subject to approval by the co-legislators, a process usually regarded as a formality. At that stage, it could hardly have been anticipated the rollercoaster journey the legislation would still have undertake before being finalised - cancelled votes, outright rejection, and frantic last minute negotiations and amendments in the face of a legislative cliff edge. And while the journey has not yet reached its destination with European Parliament approval still outstanding, a significant hurdle was overcome on Friday with the approval by the European Council of a revised CSDDD containing a number of significant concessions to Member States that had voiced concerns about the impact of the legislation on EU industry. These are reported to include: 💥 reduced scope with only companies with a turnover in excess of €450 million and more than 1000 employees being within scope with the lower thresholds applicable to high impact sectors being deleted (it has been reported that this reduces the number of companies in-scope by nearly 70% when compared to the text agreed in December) 💥 extended phase-in provisions with companies with more than 5,000 employees and €1.5 billion turnover having 3 years to comply with the directive, those with over 3,000 employees and €900 million turnover having 4 years with the remaining companies having 5 years 💥 deletion of provisions requiring larger companies to “promote the implementation” of a climate transition plan through internal financial incentives Notwithstanding these concessions, the implementation of CSDDD represents a watershed moment for corporate accountability and it’s likely that companies will start taking early steps to align themselves with its requirements despite the long lead-in period, including by reference to the UN Guiding Principles and OECD Guidelines for multinational enterprises. https://lnkd.in/eX5tmh3U #csddd

After weeks of unbearable suspense the EU Member States have approved a revised version of the Corporate Sustainability Due Diligence Directive #CSDDD, modifying its scope to include EU companies with 1000 employees and EUR 450 million worldwide net turnover, along with non-EU companies meeting the same turnover criteria in the EU. This amendment eliminates lower thresholds for high-risk sectors and reduces the number of companies subject to due diligence requirements. However, debates in the European Parliament reveal divided opinions, with some advocating for swift adoption while others express concerns over burdensome regulations impacting EU competitiveness. The CSDDD still awaits formal endorsement by the EP's JURI Committee and plenary, with a vote expected at the end of April. Implementation deadlines will vary based on company size. FESI will monitor developments closely and provide updates to members, including key aspects and a comparative overview of the directive's evolution. What an intense 4 years it has been. While some aspects are not perfect especially around the flexibility given to member states (harmonization), overall one can salute the efforts made to improve the enforceability of the initial proposed directive. Now the ball is back in the EP's court.

Today, the EU Member States failed to approve the Corporate Sustainability Due Diligence Directive (CSDDD), stalling the much-needed law that helps address the acute needs of people, the environment and businesses within and beyond the EU. After a four-year legislative effort to establish a robust law curbing corporate abuses on human rights and the environment, the Member States in the Council have delayed endorsing the deal they themselves agreed on in negotiations with the European Parliament and the Commission. The decision follows the short-sighted plan of Germany to abstain from the vote and the last-minute attack by France to significantly weaken the law by proposing to remove the majority of companies from its scope. The surprising negative turn in the Council contradicts the demands of hundreds of companies, financial institutions, academics, civil society organisations, faith leaders and others, who have supported the due diligence law over the past two years. 🗣️ “EU governments’ last-minute sabotaging and postponement of this new rulebook not only disregard the lives, communities, and ecosystems affected by destructive business practices, but also deal a blow to the EU’s credibility as a legislator,” said Uku Lilleväli, Sustainable Finance Policy Officer at WWF European Policy Office. “It’s scandalous that, in the 21st century, certain European lawmakers wish to permit companies to ignore human rights and environmental integrity, all under the guise of short-term profits. Let's be clear: the law wouldn't burden companies with unnecessary red tape; instead, it would secure a level playing field and help firms navigate necessary transitions in an informed and responsible manner.” Read our reaction in more detail here: https://lnkd.in/efK_z8_g #CSDDD

🇪🇺 🌿 On February 28th, the Council of the European Union did not approve the Corporate Sustainability Due Diligence Directive (#CSDDD), despite a previous political agreement reached among the European Commission, the Council of Europe, and the European Parliament in December 2023. Initially anticipated to be a procedural step, the Council's decision became uncertain following #Germany's unexpected withdrawal of support. This triggered a chain reaction, resulting in at least 12 EU Member States abstaining, and #Sweden voting against the directive. ⚖ The CSDDD aims to make #human #rights and #environmental #due #diligence legally binding, requiring companies to identify and mitigate adverse impacts. Penalties include fines up to 5% of turnover and potential civil claims, sparking concerns among Member States like Sweden over excessive burden on companies, especially regarding extraterritorial harm. 🚨 The Belgian EU presidency plans to address these concerns for another vote. Yet, with the European Parliament's term ending soon, failure to agree within two weeks may lead to the directive's non-adoption in this legislative cycle, endangering its future altogether. 🔍 Despite this, there are other tools available in addition to laws and directives. Global framework agreements within multinational corporations also play a role in promoting progress in sustainability. Read the "OECD - OCDE Guide on Due Diligence for Responsible Business Conduct." ⬇ ⬇ ⬇

Yesterday, the Federal Cabinet in Germany approved the Federal Ministry of Justice's draft law on corporate sustainability reporting. “We had high hopes that Independent Assurance Service Providers (IASP) like DEKRA would be included in the German government's draft law on sustainability reporting”, comments Dr. Fabienne Beez, Head of DEKRA’s Political Representation in Berlin. “The European Corporate Sustainability Reporting Directive (CSRD) explicitly provides for this possibility. Given the high demand – approximately 15,000 companies in Germany alone will be affected by the implementation of the CSRD – it is crucial now to bring together the proven strengths of the TIC (Testing, Inspection, Certification) industry and leverage their comprehensive expertise. This was also evident during the association hearing, where significant voices from the German economy advocated for this. We therefore urgently appeal not to let the remaining opportunities pass during the parliamentary process and to adjust the draft legislation accordingly.”   We will continue to monitor developments and keep you up to date on this matter. It remains to be hoped that the parliamentarians will make adjustments in the interests of companies subject to reporting requirements after the summer break. #DEKRA #CSRD #SustainabilityReporting #CorporateSustainability