BRUSSELS — A rule forcing companies to measure and report the environmental damage they cause is at risk in the European Union’s deregulation drive, three people briefed on the discussions told POLITICO on Friday.
A draft of the upcoming “omnibus” simplification legislation circulated to commissioners by European Commission President Ursula von der Leyen’s team scraps a principle known as “double materiality” in the EU’s new Corporate Sustainability Reporting Directive (CSRD), two of the officials said. All sources were granted anonymity to discuss sensitive internal issues.
Double materiality is a central concept of the European Green Deal, meant to shift the paradigm on green corporate regulation. It requires companies to consider the damage they are doing to the planet, not just the risks climate change poses to their financial health, as in more traditional sustainability reporting standards.
The CSRD is one of four pieces of recently passed green legislation targeted for simplification in the omnibus bill, part of von der Leyen’s promise to reduce administrative burdens for companies.
But there are concerns at the highest level within the Commission that red-tape slashing efforts are going too far, the three people said.
One of the officials said there is a “super big fight” ongoing. As a result, the legislative proposal has not yet been sent to the Commission’s specialist departments for checking — an unusual delay given the bill is meant to be presented next Wednesday.
“It’s going to be an ugly text, but we’re [doing] our best to save the essentials,” the official said. They added that the draft that targeted double materiality was circulated on Thursday.
The second official could only confirm that the draft was circulated this week. “The atmosphere is tense,” they said.
One of the officials said that the EU’s climate and competition chief, Teresa Ribera, had requested the draft not be sent to services until the issue is resolved.
Ribera, a Spanish socialist, is under enormous pressure to preserve the integrity of the EU’s green reporting rules. Both the Spanish government and the Socialists in the European Parliament wrote to the Commission this week warning against weakening the regulation.
The third official couldn’t confirm whether the draft the others were referencing was the latest version, but did say that at least one draft proposed unwinding the double materiality principle.
“There was one very unambitious draft. Then there was a very radical one” that went after double materiality, they said. “I believe we’re finding a balance now.”
Peter Liese, a European Parliament member who serves as the environmental spokesperson for the center-right European People’s Party (EPP) group, said there were “difficulties” in omnibus discussions. Liese also has close connections to von der Leyen’s cabinet.
“A possible compromise seems to be that the Commission ‘stops the clock’ and doesn’t put new obligations on companies for the time being until the simplification law has been agreed,” he said, insisting fast action on removing bureaucratic burdens is essential to “send the right signal to companies.”
A spokesperson for the European Commission declined to comment on internal discussions.
Marianne Gros contributed reporting.
