Hundreds of companies and investors—among them names such as H&M Group, Nokia and Allianz—have signed a letter calling on the European Union to retain the core elements of sustainability reporting currently under review as part of a drive for improved EU competitiveness.

In all, there are 475 signatories to the letter, which details measures they claim will maintain the EU’s sustainable finance framework.

Among them is a call to apply new rules in the Corporate Sustainability Reporting Directive (CSRD) to companies with 500 employees or more, rather than the 1,000—or even 3,000 worker—threshold proposed in some quarters.

The letter says: “Rules on sustainability reporting, transition plans, climate targets and corporate due diligence are a key foundation for achieving the EU’s economic and sustainability goals.”

It adds that rules such as the CSRD and Corporate Sustainability Due Diligence Directive (CSDDD) are “essential for achieving the EU’s wider sustainability growth and competitiveness ambitions”.

The rules were placed under review in February, following a report from former European Central Bank chair Mario Draghi 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.”

Who’s covered?

One issue has been the scope of the new rules, or which companies they apply to. The new letter calls for it to cover companies with 500 employees, much broader than the 3,000 proposed by Jörgen Warborn, European Parliament rapporteur, a threshold that would drastically reduce the number of companies caught by the new rules.

The most recent movement from the commission has been the publication of newly revised European Sustainability Reporting Standards (ESRS), the reporting rules at the heart of the CSRD.

The body that oversees development of ESRS has proposed an overall 69% reduction in mandatory and voluntary data points to be reported.

Double materiality

The body also wants to “streamline” the double materiality assessment companies must undertake.

In the recent letter, the companies, investors and campaign groups call for an ESRS simplification that “maintains the double materiality approach” of the earlier CSRD; ensures the scope of CSRD is for companies of 500 employees; and ensures the CSDDD remains in line with UN Guiding Principles for Business and Human Rights (UNGPs) and OECD guidelines.

Current proposals for CSDDD have been criticised for diverging from UNGP. The International Federation for Human Rights has argued the proposals go too far in “stripping the CSDDD of its practical utility.”

The omnibus has a little way to go, though European officials are on an accelerated timetable, hoping to finalise changes by the end of 2025. That means there are many voices attempting to grab headlines and sway opinion among decision makers. The final rules are unlikely to please everyone.