Sustainability, Europe is still completely behind

The title says it all: "The Council formally agreed on its position on sustainability reporting and due diligence to strengthen the EU's competitiveness." Beyond the technical language, it is clear, if there were still any doubts about it, that the European institutions start from a very simple assumption: to strengthen the competitiveness of the European system, and therefore of European companies, it is necessary to intervene on the rules of sustainability.

With this premise, we can better understand what is happening with the Omnibus decree when, starting last February, the European triad composed of the Commission, the Council and the Parliament is proceeding to dismantle the rules that these same European institutions had definitively approved in the last legislature. But, as we know, in politics, at any level, nothing is definitive and so, thanks to a unilateral reading of the various reports and warnings of the various Mario Draghi , Enrico Letta , of the so-called Budapest declaration on simplification and of a changed sensitivity on the subject (how easy it is to always blame the big bad wolf) the descent towards deregulation continues in rapid stages.

The most recent is the one announced by the Committee of Representatives of the Council of the EU – Coreper , in a press release that the most attentive observers, such as the Danish professor Andreas Rasche , already known to the readers of Produrre Bene, summarize as follows: «The Council goes much further than the Commission in terms of reducing regulations, in particular the new Csddd threshold (or Cs3d) is a significant problem».

The scope of the due diligence directive will in fact be reserved for companies with 5,000 employees and a turnover of 1.5 billion . An enormity, which drastically reduces the effects of a regulation that in its intentions wanted to make all production chains responsible for issues of respect for human rights. The declared objective is that only the largest companies are the most influential in the value chain and therefore it is right that the obligations fall only on them.

Rasche further analyses the issue by recalling how the Council's mandate shifts attention from an entity-based approach to a risk-based approach. That is, it focuses on the sectors where actual and potential negative impacts are most likely to occur: «This new risk-based approach – explains the professor – has many limitations, for example “obligations are extended only in the case of objective and verifiable information suggesting negative impacts beyond direct trading partners».

In other words, this seems to mean that the responsibility falls only on the direct partners but that, if there were certain news of violations, then the obligations would be extended. But who should give this news? The authorities? The newspapers? The social networks? At the moment it is not given to know. Last but not least, the Council also proposes to postpone the deadline for transposing the Cs3d by another year, to 26 July 2028 .

The upcoming changes on the CSRD, the reporting directive, were also confirmed: the Commission proposed to raise the threshold of employees to 1,000 and to exclude listed small and medium-sized enterprises from the scope of the directive. Not to be outdone, the Council then added a threshold of net turnover of over 450 million euros to "further ease the reporting burden on companies". A review clause was also introduced regarding a possible extension of the scope, to ensure adequate availability of information on corporate sustainability.

Simplification, uniformity of regulations, clarity of the scope of application are all positive aspects, but the impression is that we are moving towards a “conceptual” renunciation of why it is necessary to integrate the principles of sustainability into business. The true meaning of this path – which certainly needed to be simplified – risks being watered down in the name of a misunderstood competitiveness. The stages of the implementation of the Omnibus decree now include the start of negotiations with the European Parliament. Not before, however, the latter has in turn “ adopted its own negotiating position , with the aim of finding an agreement on this dossier”. The game is still long, but the bettors are all betting on the low. In the meantime, companies are growing uncertain, which is not exactly a great competitive lever.

Read the latest updates from the ProdurreBene channel

Opening: Coreper in session, photo from the press office of the Council of the EU