Directive Proposal on Aligning Member States' Laws for Greenhouse Gas Emission Limit Values is Adopted by the Commission
Revamped Perspective on Climate Action:
Companies, big and small, are under increasing pressure to combat climate change and become more sustainable. In the EU, this responsibility is backed by two significant directives - the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
Sustainability Reporting vs Due Diligence:
The CSRD is all about transparency. It demands companies to disclose detailed information about their climate change impacts and strategies, focusing mainly on aligning business models with the Paris Agreement goals. This includes setting time-bound greenhouse gas (GHG) emission reduction targets, outlining decarbonization actions, and integrating transition plans into overall business strategy.
On the other hand, the CSDDD, prior to recent changes due to the Omnibus Initiative, required companies to adopt and implement comprehensive climate transition plans to ensure climate neutrality. Now, however, the legal obligation to adopt such plans has been removed. Nevertheless, other due diligence duties remain.
Changing Landscape:
The Omnibus Initiative aims to alleviate administrative burdens on companies and authorities by relaxing requirements under the CSDDD. This includes removing the mandate to adopt a climate transition plan, allowing companies to prioritize and skip less significant adverse impact areas, and reducing due diligence on direct business partners with fewer than 3,000 employees.
Continued Pressure for Climate Planning:
Even with relaxed CSDDD requirements, companies are still encouraged to publicly report and justify their climate strategies under the CSRD. Therefore, while the direct regulatory pressure on climate transition planning may have lessened, companies still face high transparency expectations.
In essence, complying with the CSRD requires companies to disclose robust, transparent climate transition plans, providing detailed insights into strategic climate action. Meanwhile, the CSDDD, post the Omnibus Initiative, has reduced its mandatory climate transition plan obligations and emphasizes prioritized due diligence.
This regulatory landscape creates a potentially lighter compliance burden for companies but maintains high transparency expectations. Companies are incentivized to align their business models with climate goals primarily through reporting rather than mandatory due diligence plans.
Prof. Dr. Markus Appel, LL.M, Partner for Environmental and Planning Law at Linklaters in Berlin, stands at the forefront of these crucial climate change discussions.
- In the realm of environmental science, Professor Dr. Markus Appel, a partner for Environmental and Planning Law at Linklaters in Berlin, has been diligent in advocating for stricter policies and legislation regarding climate change.
- The EU's Corporate Sustainability Reporting Directive (CSRD) intends to promote transparency in businesses, necessitating detailed disclosure about climate change impacts and strategies to align with Paris Agreement goals.
- The call for sustainable business practices extends beyond Europe, with finance and business sectors worldwide under continuous pressure to integrate climate-change considerations into their operations and policies.
- Despite the recent changes to the Corporate Sustainability Due Diligence Directive (CSDDD) due to the Omnibus Initiative, the general news reveals the significance of environmental-science research and the ongoing need for companies to exhibit transparency in their climate strategies.
