The Parliament's proposals would make the proposed law tougher and more rigorous, yet there is one big flaw: it would only apply to 0.2% of companies.
The European Parliament finalised its position yesterday evening on the Corporate Sustainability Reporting Directive (CSRD) during a vote in the Legal Affairs Committee (JURI). The European Parliament introduced several improvements to the Commission’s original proposal, especially on reporting requirements for sustainability issues like companies' transition plans and science-based targets.
In addition, when it comes to the indicators (standards) that companies will have to report on, the Parliament adds more detail than the Commission had done. These indicators are aligned with the EU Taxonomy’s six environmental objectives, for example, climate, and biodiversity. These changes would make the CSRD significantly more ambitious than the current directive (the Non-Financial Reporting Directive) and give users comparable and good quality sustainability information.
However, WWF is deeply concerned about the scope of the EU Parliament’s proposal. The proposal excludes all small and medium-sized enterprises (SMEs), yet these represent 99.8% of EU companies.
Julia Linares Sabater, Senior Sustainable Finance Policy Officer at WWF European Policy Office, said: “The Parliament's proposal is like a huge train finally starting to go in the right direction - but leaving all nearly the passengers behind. The proposal will only be relevant for 0.2% of European companies. The climate and biodiversity crisis is inflicting a deep wound on our planet. To solve them, we need more than a band-aid.”
The Parliament has also requested that the Commission provide a list of sectors considered ‘high-risk’ , which is a key step forward.
The trialogue negotiations will start on the 28th of March, and the text will be finalised in the coming months. WWF calls on EU institutions to maintain the level of ambition of the Parliament’s proposal in terms of content, but to improve the scope by including SMEs that operate in high-risk sectors like extractive industries, power production or financial activities.
For more detailed analysis, please see the Alliance for Corporate Transparency reaction, of which WWF is a member.
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