European Commission to propose revision of corporate sustainability legislation

In a significant development for EU corporate sustainability legislation, European Commission President Ursula von der Leyen has announced plans to merge three cornerstone sustainability frameworks – the Corporate Sustainability Due Diligence Directive (CSDDD), the Corporate Sustainability Reporting Directive (CSRD), and the Taxonomy Regulation – through so-called omnibus legislation.

While the Commission maintains this consolidation aims to streamline reporting burdens and reduce bureaucratic overlap without altering substantive requirements, the proposal may have unintended consequences as it could inadvertently reopen these established frameworks to substantial revision during the legislative process.

Under the EU’s legislative process, once the Commission tables its proposal, both the European Parliament (EP) and Council will have opportunities to propose amendments. Recent precedent from the EU Deforestation Regulation (EUDR) vote suggests that center-right coalitions may push for more extensive changes than initially intended.

The technical complexity of merging these frameworks presents additional challenges, given their different legal forms (regulations versus directives) and varying scope of application. While the European Sustainability Reporting Standards should remain unchanged under Commission mandate, the broader implications of this consolidation remain uncertain.

Mayer Brown closely monitors these developments as they may significantly impact corporate sustainability compliance requirements in the EU.

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