Statement response in regard to the EU Announcements on EU Green Deal

The European Commission has today proposed legislation that will pull 80% of potential companies out of mandatory sustainability reporting requirements. Regulation has been fundamental to business action and their associated ESG approach in the mitigation of climate risk. Any adoption of the revised Directive will need to be passed by the European Parliament and the EU council - as such, a number of hurdles to pass. A number of companies in the first wave of adoption have already published their CSRD reports, and are now embedding the principles of the EU Taxonomy in their business. The proposed approach retains the principle of double materiality, and whilst only businesses with 1000 staff, and either EU25m balance sheet or EU50m turnover are mandated to report in the next two years - smaller business will nonetheless remain part of the value chain. 

The CSRD Directive has already been transposed into law in a number of EU countries - including France (the first country to do so) & Republic of Ireland (with additional jurisdictional overlay). As such, companies in these jurisdictions will still need to comply. The legal ramifications surrounding any unwinding of such comprehensive frameworks could be material and businesses need to have certainty for their ESG Financial planning. 

The proposed narrative around CSDDD is looking to be watered down, although no changes until negotiations are complete. CBAMS may see 90% of importers exempt from the current rules. For smaller companies that tipped into CSRD with limited climate risk exposure and footprint - this will bring relief in the current economic landscape. 

Despite the current uncertainty given the Omnibus announcement, our SASP registration accredited through IAASA allows us to continue to serve our clients in the sustainability space and sign-off on CSRD reports in the EU, partnering with them as we navigate the potential changes which could, or could not, materialise given these recent developments.

Our view is that whilst large corporates are still expected to comply and be independently assured, the responsibly lies with 'actors' within the entire value chain to ensure coordinated and validated ESG Impact. Our work with business leaders & regulators indicate the value gained from double materiality assessments has been significant from both a financial and operational perspective. Our view is that streamlining of the CSRD Framework in a proportionate and orderly manner should not put climate risk mitigation in jeopardy.