Anger has emerged among EU observers after it became apparent that Brussels lawmakers may be considering options that would significantly reduce the scope of sustainability reporting rules for companies across the continent.

Two proposals for consideration have been slated that would mean the reporting rules contained in the Corporate Sustainability Reporting Directive (CSRD) should apply to far fewer companies than the original proposals. One proposal would cut the number of companies caught by CSRD by 90%, the other, support by the European People’s Party (EPP) and far right groups, by 92%.

Observers, including academics, see the proposals as undermining the original intent of the legislation, which has been under review since February as part of the so-called “omnibus” project.

Backward step

Andreas Rasche, a professor at Copenhagen Business School, says on LinkedIn: “Such significant scope reductions have really nothing to do with regulatory simplification.

“This takes us back to a time when sustainability was seen as something only big corporations could afford. The idea that voluntary action will fill the gap is wishful thinking, and research doesn’t support it.”

The options were revealed in a webinar by Pascal Canfin, a French MEP on the European Parliament’s legal affairs committee, currently debating the omnibus. According to the options, cutting the scope of CSRD could be achieved either by applying the laws to companies of 1,000 employees and with a turnover of €450m; or 1,750 employees and €450m in turnover.

Originally, CSRD was to apply to companies with 250 workers and €50m turnover, capturing many SMEs across the territory.

Canfin says the criteria for CSRD catching non-EU companies—its extra-terroritorial element—is still being debated. He says the outcome will be “sensitive” given Washington’s anti-CSRD posture.

The news comes as the committee enters the final stages of horse trading over CSRD, and its sister legislation, the Corporate Sustainability Due Diligence Directive (CSDDD), in advance of a vote on 13 October and a plenary vote the week beginning 20 October before omnibus enters trilogue negotiation.

At this stage, it looks as if the threshold for falling into scope of CSDDD will rise from 1,000 employees to 5,000 and turnover of €1.5bn.

If the EPP proposal, supported by far right groups, goes through, it could be a significant blow for Ursula von der Leyen, the European Commission president, who ordered a review of the EU’s green laws.