EU Updates - April
The European Parliament Backs Amendments to Extend the Scope of the CSRD
The compromise amendments backed by the Legal Affairs Committee of the European Parliament would extend the scope of the Corporate Sustainability Reporting Directive (CSRD) to include large international corporations selling goods and services in the EU. Just like their European counterparts, big foreign companies doing business in the EU would have to disclose information on their environmental impact and how climate change could affect their operations.
At the vote on 15th March, the compromise brokered by the French rapporteur Pascal Durand of Renew Europe was supported by all the major political groups and included also:
The elimination of listed SMEs from the scope of the Directive
The requirement for companies to employ a different auditor for sustainability reporting from their financial accounts
The removal of the exemption for the subsidiaries of large companies to report sustainability data.
A one-year delay in the disclosure of compared to the original proposal of the Commission, with reports to be published in 2025.
A clarification of the disclosure of sustainability targets with additional guidance for the development of mandatory EU standards on climate matters
The alignment between due diligence related disclosures and the recent proposal for the EU Corporate Sustainability Due Diligence Directive
Earlier in February, the Council of the European Union agreed on its position on the Proposal for a Corporate Sustainability Reporting Directive and amended the scope proposed by the European Commission to ensure that reporting requirements are not too burdensome for listed SMEs and that they have sufficient time to adapt to the new rules.
Next Steps
The French Presidency of the Council will engage in further discussions with the European Parliament this spring.
Get your company ready
CSR Europe’s corporate members are invited to join the member-only Atelier “Guide to the Use of Reporting Standards”, taking place online on 30th November 2022.
For more information:
Markets and EU Manager
ISSB Releases Global Sustainable Reporting Standards
On 31st March, the International Sustainability Standards Board published its proposed draft global standards for sustainability and climate-related disclosures by companies, in an effort toward more uniform information on the risks that climate change poses for businesses. One proposal – exposure draft - set out general sustainability-related disclosure requirements and the other specifies climate-related disclosure requirements.
Information on governance, strategy, risk management, metrics, and targets would have to be produced at the same time as the general financial statements. When it comes to climate change, companies would have to disclose how global warming may affect their business model, strategy, cash flows, access to finance, and cost of capital. They’ll also have to identify transition risks, like the move to a low-carbon economy, and physical risks, like flooding or rising sea levels — and explain for the latter whether those risks are acute or chronic. Also, companies will have to reveal their greenhouse gas emission levels.
Join the consultation
The drafts will be open for consultation until 29th July, with the aim of issuing the standards by the end of the year.
Get your company ready
CSR Europe’s corporate member are invited to join the member-only Atelier “Guide to the Use of Reporting Standards”, taking place online on 30th November 2022.
For more information:
Markets and EU Manager
The EU Commission Presents Sustainable Products Package
On 30th March, the European Commission released four key documents of its much-awaited circular economy package aimed at making products more sustainable.
The Sustainable Products Initiative to make products more sustainable by transforming how they are produced and reducing related energy consumption and emissions.
The EU Strategy for circular and sustainable textiles, which lays out the Commission’s vision for a more sustainable textiles industry
The proposal for a Directive on empowering consumers for the green transition to fight greenwashing
The review of the Construction Product Regulation to ensure that construction products can freely circulate within the Single Market.
The Sustainable Product Initiative
Under the new plan, products would be made more sustainable by transforming how they are produced and reducing related energy consumption and emissions.
The Commissions will replace its eco-design directive with a regulation on “eco-design for sustainable products.” The regulation would set standards for a product’s recyclability, the amount of recycled content it contains and its carbon and environmental footprints.
The initiative also lists requirements Brussels could set for the design of certain kinds of products — like electronics, textiles, chemicals and furniture — and proposes standards for products’ durability, reusability and upgradability, as well as ease of maintenance and repair, energy use and efficiency.
Requirements for specific products will come later in secondary legislation, known as delegated acts.
The EU Strategy for circular and sustainable textiles
The Commission is aiming for all textiles to be long-lasting, recyclable, made of recycled fibers, free of dangerous substances and “produced in respect of social rights and the environment” by 2030. The Commission also announced that it will develop guidance on circular economy business models featuring the textile sector in 2024 and restrict exports of textile waste outside the OECD from 2023. Finally, it will also force large companies to disclose information on discarded products, in a move that could pave the way to a ban on the destruction of unsold textile items in 2024.
Proposal for a Directive on empowering consumers for the green transition
This proposal amends the Unfair Commercial Practices Directive and the Consumer Rights Directive and would:
Ban companies from displaying sustainability labels that were not established by a relevant authority or scheme
Outlaw the use of generic environmental claims used in marketing under certain conditions.
Grant consumers information about the guaranteed durability of products and their repairability. In case they find a company that has breached the rules, they would be able to apply for “remedies”.
The review of the Construction Product Regulation
According to the proposed Regulation, the manufacturers will have to deliver environmental information about the life cycle of their products. Moreover, they will have to comply with several obligations, including:
Design and manufacture a product and their packaging in such a way that their overall environmental sustainability reaches the state of the art level;
Give preference to recyclable materials and materials gained from recycling;
Respect the minimum recycled content obligations and other limit values regarding aspects of environmental sustainability;
Make available, in product databases, instructions for use and repair of the products;
Design products in such a way that re-use, remanufacturing and recycling are facilitated.
