• info@esgwise.org
France Calls on EU to Delay, Water Down Sustainability Reporting and Due Diligence Requirements

France Calls on EU to Delay, Water Down Sustainability Reporting and Due Diligence Requirements

The government of France has called for a significant implementation delay and major amendments to some of the key European sustainability reporting and environmental due diligence regulations introduced over the past few years, in a bid to help reduce bureaucratic burdens and simplify compliance obligations for companies, and for small and medium-sized businesses in particular.

In a submission sent to the European Commission this week, France urged the EU to put in place a “massive regulatory pause” on key pieces of legislation, including the EU’ Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), citing the loss of GDP potential caused by excessive regulatory complexity, and in light of a new competitive environment and the “uncooperative policies of our main competitors.”

The submission follows a push for some similar measures to delay and ease the EU’s green reporting rules under way by the German government, and comes as the EU Commission considers new omnibus legislation as part of its regulatory simplification agenda, which could potentially open settled legislation – such as the CSRD, CSDDD and EU Taxonomy – to new amendments. Several major businesses have called on the EU to avoid watering down the existing legislation, warning that changes at this stage would lead to policy uncertainty, and undermine significant investments that companies have already put in place to comply with the new rules.

Among the most significant changes urged by France is a call to put in place “an indefinite postponement” of the implementation of the CSDDD.

The CSDDD was initially proposed by the European Commission in February 2022, setting out obligations for companies to identify, assess, prevent, mitigate, address and remedy impacts on people and planet – ranging from child labor and slavery to pollution and emissions, deforestation and damage to ecosystems – in their upstream supply chain and some downstream activities such as distribution and recycling.

The legislation was adopted in May 2024, but only after a long process that ultimately required revisions in the legislation that significantly scaled back the number of companies covered by the law, and extended the timeline to its full implementation.

One of the key factors that jeopardized the passage of the CSDDD legislation was a last minute effort by France to significantly scale back the scope of the new rules to apply only to companies with more than 5,000 employees, instead of the proposed 500 employee threshold, effectively removing roughly 80% of businesses from the CSDDD obligations.

The new submission by France again calls to increase the threshold to companies with more than 5,000 employees and revenues greater than €1.5 billion, in addition to other amendments to simplify and ease the legislation’s obligations.

The French government’s submission also called for major changes to the CSRD sustainability reporting legislation, including echoing Germany’s call to delay implementation of the rules for smaller companies set to begin reporting next year, and to pause sector-specific reporting requirements under the regulation. France also proposes reducing reporting obligations for medium-sized companies, requiring them only to be subject to the less onerous rules provided for listed SMEs.

The submission also calls for the CSRD’s “reporting obligations to be significantly lightened by drastically reducing the number of indicators and focusing them on climate objectives.” Additionally, France called for a clarification from the Commission on the requirement under the CSRD for transition plans, indicating that the plans should not require the plans to align with the Paris Agreement, but instead for the plans to only include a comparison of a company’s targets with the Paris Agreement’s objectives.

In the submission, the government of France said:

“A powerful means of improving the competitiveness of European businesses is to simplify and accelerate administrative procedures to promote investment projects in the EU, and to create a simple and predictable regulatory environment, particularly for SMEs and mid-sized companies.”

Leave a Reply

Your email address will not be published. Required fields are marked *