Campaigners are braced this week for significant changes to EU non-financial reporting rules as Brussels prepares to release details of the “omnibus” legislation that could transform sustainability reporting rules.

There is speculation that the EU could scrap the “double materiality” principles that lie at the heart of the Corporate Sustainability Reporting Directive (CSRD), a concept that asks companies to report not only the impact of climate change on their businesses, but also the impact of their activities on people and the environment.

Double materiality made the CSRD the most stringent of sustainability reporting frameworks in the world.

Politico, a politics website, reports officials have been briefed that “double materiality” is proposed to go, although there has been a “super big fight” over details of a draft.

One source told Politico that the “draft that targeted double materiality was circulated last Thursday”.

‘Not at all proportionate’

Meanwhile, one academic has condemned leaked versions of the omnibus draft circulating on LinkedIn.

Andreas Rasche, a professor of business in society at Copenhagen Business School, says the version he has seen is “very disappointing and not at all proportionate”.

“The EU has started to dismantle key Green Deal regulations that it spent much time on during the last five years.

“Yes, simplifications are needed and there are ways to make such simplifications, but what is suggested in this document does not simplify. It deregulates… and it deregulates at significant scale.”

One of the many issues Rasche has is the draft document’s suggestion that due diligence of supply chains will only take place with “direct business partners”.

The document suggests due diligence further down a supply chain will only be required under certain circumstances such as “information that suggests an adverse impact”. This might occur if a partner’s business structure is designed to remove “harmful activities from the purview of the company”, or where there are credible press or NGO reports of problems.

Perhaps most worrying for many campaigners is that the leaked document suggests the EU will do away with an “EU-wide liability regime” as it currently stands.

On the CSRD, it looks like Brussels is considering a reduction in the scope of the legislation to touch only companies with 1,000 employees and a turnover of €450m or more.

There has been debate over CSRD and CSDDD (Corporate Sustainability Due Diligence Directive), since they were conceived but the argument was intensified last year when a report on EU competitiveness, from former European Central Bank president Mario Draghi, claimed the new framework of corporate reporting was a drag on growth.

In a recent Financial Times editorial, Draghi wrote that the EU had created its own “tariffs” through “internal barriers” like regulation.

“These are far more damaging for growth than any tariffs the US might impose—and their harmful effects are increasing over time.”

The EU will also have to face objections in the US to the “extra-territorial” effect of CSRD and CSDDD, an element one politician described as an “example of a foreign regulation that puts America last”.

The EU is expected to publish the omnibus proposals on Wednesday, 26th Feb.