Pressure is building in Europe to revisit the vast new sustainability reporting rules, with just months to go before they are due to be fully implemented.

The argument over the Corporate Sustainability Reporting Directive has forced some campaigners to come out in support of the rules and condemn any talk of a U-turn.

Elsewhere, voices have been raised in opposition, suggesting the reprint requirements go too far.

In an article just last month, lawyers from Frank Bold, a campaigning law firm, called for the EU to stand firm on the Corporate Sustainability Reporting Directive (CSRD).

“The EU must resist the temptation to make U-turns on its legal framework,” write Julia Otten and Susanna Arus.

“Companies need clarity and, if necessary, additional guidance and phased implementation to navigate the transition effectively.

“The path to a sustainable economy may not be easy, but it is imperative. By embracing standardised sustainability disclosures, the EU can ensure a resilient and competitive economy, capable of leading the global sustainability transition.”

CSRD is due to be ‘transposed’ into national legal frameworks by July this year, with the first corporates due to use its rules in 2025. However, the EU is taking “infringement” action against 17 states that failed to meet the July deadline.

Given the go-ahead last year, the CSRD is expected to apply to 50,000 companies across the European Union, those with a turnover of €40m or more than 250 employees.

Material concerns

The legislation asks companies to report on a range of sustainability issues, and includes a “double materiality” principle—not only must companies report on the impact of climate change on their business, but also on the impact of their business activities on the environment and people.

The Frank Bold article argues that concerns arise with CSRD because companies are “trying to over comply”, which is leading to large corporates demanding “excessive data” from smaller businesses in their supply chains. Otten and Arus say this is happening even though the legislation does require companies to seek “value chain metrics” except for “estimated” scope 3 emissions.

In addition, they say some companies have engaged disclosure advisers to provide guidance, which leads many companies to focus on many “non-material aspects, instead of applying the filter of materiality”.

Objections to CSRD have been mounting around Europe but possibly found a trigger in the key Mario Draghi report issued in September on the EU’s international competitiveness. The former European Central Bank leader said the EU was failing on innovation and reporting obligations should be cut by 25%, and by 50% in total for SMEs.

Last week, lawyer Kolja Stehl, from law firm Görg, detailed numerous complaints from German politicians about CSRD in an article for the academic portal SSRN. He reports that Germany’s Bundesrat has called on national leaders to persuade the EU to “significantly cut back” on the legislation. A German minister has called it a “bureaucratic monster” , while Germany’s justice minister Marco Buschmann (pictured) has said the time before full implementation should be used to “renegotiate” the rules.

In France, prime minister Michel Barnier has said he wants a “moratorium” to delay the implementation of CSRD.

Meanwhile, specialist publication Responsible Investor cites a number of anonymous investors expressing concern that talks over CSRD may be reopened.

CSRD caused much debate in its development, but it comes at a time when campaigners and business groups have begun to make inroads with the argument that regulation has become too burdensome. CSRD does not stand alone. Other waves of sustainability rule-making have taken place, including the creation of the Corporate Sustainability Due Diligence Directive (CSDDD).

It remains to be seen if a renegotiation will take place. But given the context set by the Draghi report, and a general consensus that the EU may be in decline, though not in crisis, renegotiation at this stage cannot be ruled out.