Nearly 100 organisations have signed a letter calling on the European Commission president Ursula von der Leyen (pictured) to resist watering down brand new non-financial reporting requirements in the face of political pressure. Opponents to the new rules claim they are an “unnecessary burden”.

Co-ordinated by the campaigning European law firm Frank Bold, the letter defends the EU Corporate Sustainability Reporting Directive (CSRD) and is signed by bodies including the World Wide Fund for Nature, the Interfaith Centre for Corporate Responsibility and the European Trade Union Confederation.

Signatories to the letter are “deeply concerned” that CSRD is being portrayed in some circles as a “threat to competitiveness”. They say recent statements serve a “full deregulatory agenda”, rather than a “simplification initiative” aimed at supporting companies in their move to sustainable business models.

“Instead of playing ping-pong with the legal framework, we strongly encourage focusing on smart and easy implementation and consider the current lack of key data relevant for the economic transformation,” the letter says.

The letter comes at a time when both French and German politicians have complained about the regulatory burden CSRD could cause and suggested a review might be necessary.

Concerns grew further when former European Central Bank president Mario Draghi (pictured) published a much anticipated report on European competitiveness, in which he drew attention to difficulties caused by regulation.

He wrote: “The EU’s sustainability reporting and due diligence framework is a major source of regulatory burden magnified by a lack of guidance to facilitate the application of complex rules and to clarify the interaction between various pieces of legislation.”

En route to ‘omnibus’ legislation

Von der Leyen has started a new project to create “omnibus” legislation from three separate directives, including the CSRD and the Corporate Sustainability Due Diligence Directive. The move has been seen by some opponents as an opportunity to weaken the harshest elements of the CSRD.

Already there are signs that companies are struggling with one of CSRD’s core elements—the “double materiality” principle, in which companies report not only on the impact of the environment on their business models but also the impact of their activities on the environment and society.

Research from European Issuers, an association for listed companies, reveals 77% of corporates have had to seek help with the issue as they prepare their first reports.

Another report, from the consultancy Capgemini, claims 47% of companies subject to CSRD have so far failed to conduct a “double materiality assessment”.

US companies with European operations have long known they will have to comply with the new reporting demands but, there too, there are issues. A report from KPMG found only 11% of companies polled had conducted their own double materiality assessments.

This proportion is expected to improve. However, observers anticipate a declining US interest in sustainability once Donald Trump becomes president. New climate-risk reporting standards designed for Wall Street appear to be dead in the water.

Frank Bold’s letter argues the CSRD is necessary to be a “catalyst for the necessary economic transformation” and provide legal certainty over “short-sighted” political policymaking. The letter argues the directive is “flexible”, to avoid over compliance, and focuses only on large companies.

However, the omnibus procedure has been set in train. Amendments to CSRD may yet follow.