Differences between the European Parliament and EU member states on due diligence rules are set to be exposed next week after a committee vote confirmed a compromise deal backed by the European People’s Party.
The parliament’s legal affairs committee (JURI) voted in favour of the sustainability omnibus package, which aims to reduce reporting obligations and administrative burdens under EU sustainability laws, including the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD).
MEPs will now hold ‘trilogue’ talks with the European Council to iron out differences between rival versions of the omnibus text. The council’s Danish Presidency is expected to start negotiations as soon as possible, in the hope of completion before its term closes at the end of the year.
“Due diligence is set to become the next big discussion point,” Richard Gardiner, Interim Head of EU Policy at sustainability-focused charity ShareAction, told Sustainable Investor.
According to Gardiner, the parliament’s text maintains a relatively robust due diligence framework for companies which applies a risk-based approach to scrutiny beyond direct suppliers. But this could be challenged during the trilogue process, as the European Council’s position restricts firms’ due diligence obligations to their nearest and largest supply chain partners.
The text approved by JURI represents a significant step back from the initial scope of both the CSDDD and the CSRD, following a reform process that generally did not distinguish between the two directives. Their scope is now limited to firms with 5,000+ employees and €1.5 billion turnover.
The committee vote preserves mandatory climate transition plans but removes requirements for “implementing actions” and require only “reasonable” efforts for business models to be compatible with EU climate law.
It also removes civil liability provisions, which critics say will reduce access to justice for victims seeking fair compensation.
“The decision to remove civil liability is a serious setback for corporate accountability and enforcement. Companies should be held responsible when they fail to prevent harm to people and the planet,” said Gardiner, adding that the process had watered down the legislation overall and was holding back Europe from delivering on its sustainability commitments.
