Experts now anticipate major changes to the EU non-financial reporting laws after the French government weighed in with a call for a “massive regulatory pause” in the introduction of the new laws.

France has asked for “indefinite postponement” of the Corporate Sustainability Due Diligence Directive (CSDDD)—a law that asks companies to report on human rights and sustainability in their supply chains—and a two-year delay to the Corporate Sustainability Reporting Directive (CSRD) and its swathe of new disclosure requirements.

One expert, Andreas Rasche, a professor at Copenhagen Business School, notes on Linkedin: “Everybody who still thinks that the EU’s omnibus simplification package will just be about a few simplifications and minor alignments is either not well informed or naive.”

The French government also wants to see the new responsibilities apply only to the largest companies and seeks new categories of business that could be shielded from the full application of the rules.

Seeking change

France joins Germany in calling for a change in approach to the reporting obligations. The campaign for amendments from Europe’s biggest members raises the possibility that the EU’s ‘omnibus’ project to amalgamate and simplify the new reporting rules will, in fact, lead to major change.

A leaked document from the EU suggests that Brussels is working on a new definition of “small mid-cap” companies to ensure they do not face the full weight of the reporting burden and suggests the data requirement for reporting may be reduced and hints at changing schedules.

The document says the “Commission will ensure tight alignment of the data required with the needs of investors, proportionate timelines, focus on the most harmful activities, financial metrics that do not discourage investments in smaller companies in transitions and obligations proportionate to the scale of activities of different companies.”

Some of the largest companies are expected to produce their first CSRD reporting this year, based on disclosures for 2024. National governments are now working to move the CSDDD into their legal systems.

Central argument

Both directives have been the subject of doubt and pressure for some time. That culminated in an attack from Mario Draghi, former head of the European Central Bank, when he published his much anticipated report on EU competitiveness last year.

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.”

The omnibus is designed to address the clarification, but it is now clear that France and Germany see an opportunity for more significant reform.

It emerged last week that US business interests and lawmakers have CSRD in their sights. The US Chamber of Commerce has complained to politicians about the extra-territorial reach of the rules, whereby the EU divisions of foreign companies must comply. And there are already signs that the new Donald Trump administration objects to the disclosures and could turn them into a bargaining chip in any future trade negotiations.

Both CSRD and CSDDD are far-reaching pieces of rule-making and the EU is set to address them. The only question now is how far changes might go and whether it will happen before they become a point of contention between the EU and the White House.