EU lawmakers push to weaken corporate sustainability disclosure

By Huw Jones

LONDON (Reuters) – EU lawmakers will be called on to back a proposed weakening of mandatory sustainability disclosures for about 50,000 companies next week, in the latest move by centre-right parties to water down the 27-member bloc’s green agenda.

More than 40 lawmakers, mainly representing the European Parliament’s largest party the EPP, have tabled a motion to be voted on by the full parliament on Oct. 18.

The motion says the disclosures proposed by the European Commission put a “high administrative burden” on companies, and also jeopardise the European Union executive’s plans to cut red tape and reporting obligations to make the EU more competitive.

The threshold for companies coming into scope of the new rules should be raised, it added.

The disclosures flesh out the EU’s Corporate Sustainability Reporting Directive (CSRD), which requires mandatory reporting of environmental, social and governance factors from 2024 to stop companies exaggerating their sustainability credentials.

Parliament and EU states can either adopt or approve the proposed European Sustainability Reporting Standards (ESRS).

Centre right lawmakers are pushing back against the EU’s green agenda, echoing a backlash among Republicans in the United States. But mustering a majority in parliament to reject the ESRS norms will be challenging.

Mairead McGuinness, the European commissioner responsible for the ESRS, said on Friday that she detected a year ago concern among businesses about being overwhelmed.

“I did listen carefully and what we have at the moment are very proportionate standards,” McGuinness told a meeting of the Institute of International Finance.

The Commission has already watered down the proposals that were initially drafted by EU accounting advisory body EFRAG.

A separate draft EU law, the corporate sustainability due diligence directive (CSDDD), is also facing EPP opposition, as parliament and EU states try thrash out a final text, with some against including the financial sector within its scope.

(Reporting by Huw Jones; Editing by Alexander Smith)