On Tuesday 21 June, a provisional agreement was reached in trilogue on an amended version of the Corporate Sustainability Reporting Directive (CSRD). The ETUC is pleased to report that a number of its key demands for amendments to the original Commission proposal from April 2021 have been taken up in the agreement between the European Parliament and Council.
In particular, the following improvements to the Commission proposal are included in the provisional agreement:
- Trade union and workers’ representatives will have a greater role in the reporting process, which should help reduce the risk of greenwashing and improve the relevance of sustainability reporting for workers and other stakeholders
- Non-EU companies with significant business and at least one branch or subsidiary in the EU have been added to the scope of the directive;
- The list of human rights instruments and specific social issues covered by the CSRD has been expanded
- Companies will have to be transparent about specific information on the risks and impact from individual subsidiary companies;
- Regarding audits on sustainability reporting, measures have been put in place to attempt to reduce the concentration of the auditing market;
- Although the draft agreement falls short of the ETUC’s demand for 100% public funding and balanced representation of trade union, civil society and business in the European standard setting body (EFRAG). Nevertheless the agreement does improve public funding, supervision and stakeholder representation in EFRAG. The European Parliament will play a role in holding this body accountable; trade unions and civil society organisations are reinforced as key participants in the standard-setting process.
- Although the agreement does not include the EP’s amendments which list specific sectors with high environmental and social risks, sector specific standards will have to be developed in a way that takes into account the specific risks and impacts of each sector.
- Companies will have to disclose information about schemes that link a part of company executives’ pay to sustainability targets;
- Finally, against considerable resistance from the business community, listed SMEs have been kept in the scope of the directive;
This provisional agreement on a considerably strengthened CSRD thus represents an important milestone in increasing transparency on their impact on people and planet and making companies more accountable to workers, trade union and workers’ representatives, and other stakeholders.
As for the next steps, the provisional agreement reached in trilogue will now need to be confirmed by the Deputy Permanent Representatives in Coreper I. Following that it will be voted on and adopted by the EP (first in the JURI committee and then in plenary) and finally “rubberstamped” in the Council again. For the moment we do not have confirmed dates yet for any of those meetings, but we will keep you posted in due time of those dates and on any further actions we are requesting from you towards the representatives in the Coreper and EP.