There is now formal pressure on the European Commission to go much further in its reform of corporate sustainability reporting and ensure it applies only to companies with 3,000 employees or more.

The call comes from the European Parliament rapporteur, Jörgen Warborn, who says the scope of the Corporate Sustainability Reporting Directive (CSRD), and Corporate Sustainability Due Diligence Directive (CSDDD), should be lifted from the current proposal of companies of 1,000 employees.

In its original form, CSRD was to apply to companies of 250 employees, which would have numbered about 53,000 across the EU.

In addition, Warborn proposes companies subject to CSDDD should only be able to request information from companies with more than 3,000 employees.

In a new paper, Warborn outlines proposals that would vastly reduce the number of companies subject to the new reporting rules.

In a post on LinkedIn, Warborn says: “I’m entering this process with a clear ambition: to cut costs for business and go further than the commission on simplification.

“Less red tape and fewer burdens for businesses. That’s how we strengthen Europe’s economy.”

Warborn’s paper forms the basis for negotiation now between the European Parliament and the European Commission over the final form of the ‘omnibus’ legislation.

‘What will be left?’

Not all observers are impressed with Warborn’s proposals. Danish academic Andreas Rasche posted on LinkedIn: “With this new scope, one needs to ask: what will be left of the CSRD and CSDDD?”

He adds: “Hopefully, other political groups in the centre will push back so that a meaningful compromise can be found.

“We need simplification of some aspects of the directives. What we do not need is deregulation and a simplification of the underlying debate. Unfortunately, the [European Parliament’s] proposal moves further in this direction.”

Elsewhere, environmental campaign group the World Wildlife Fund (WWF) says Warborn’s proposals are “ignoring evidenced-based” data.

Thibault Girardot, sustainable finance policy officer at WWF: “It seems like the ultimate goal is to render Europe’s flagship environmental laws irrelevant, taking the EU decades backwards.”

He adds: “If the EU really wants to support businesses and act in the best interests of people and nature, it must stand by the carefully crafted laws on corporate sustainability.”

The omnibus reform process has prompted heated debate in Europe since it was launched in February.

The European Commission’s efforts to reform the proposed legislation were triggered in September last year, when former European Central Bank president Mario Draghi issued a report on European competitiveness in which he said: “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.”

Both the European Central Bank and the United Nations have expressed concerns, but the process to finalise new reporting rules will likely run until late in the year.