Editor’s note: bad faith and biodiversity net gain

The latest edition of our Sustainable Views newsletter

Dear reader,

EU member states may have thrown the future of the EU Corporate Sustainability Due Diligence Directive into question, but even if the law fails to be agreed, experts insist this does not mean companies will have been given carte blanche to pollute and ignore human rights abuses. 

Even without the CSDDD, “expectations on businesses to conduct business sustainably across their supply chain are not going to disappear and are only going to increase”, Tracey Groves, head of sustainable business and ESG at consultancy DWF, told me, citing the Corporate Sustainability Reporting Directive and increasing demands from investors and consumers for “greater accountability and transparency across the value chain”.

And failure to agree the directive could make life more, not less, complicated for companies, as certain politicians are arguing. A plethora of national legislation — Germany, a key instigator of the opposition to the CSDDD, already has its own due diligence rules — is rarely helpful for companies operating across borders. 

Richard Howitt, former member of the European parliament and lead negotiator on the EU Non-Financial Reporting Directive, also highlighted how a plethora of non-EU countries, including Brazil, Norway, South Korea, Japan, the UK and the US, are moving ahead with due diligence initiatives. 

Perhaps most worrying in all of this, as alluded to yesterday by Lara Wolters, the parliament’s lead negotiator on the file, is what such last-minute opposition to essentially done deals means for democracy in the EU. 

There was much celebration by environmental groups in Brussels after the EU’s Nature Restoration Law was approved by the parliament earlier this week, but they were cheering a deal they had previously slammed as being much weaker than the original proposal. And, while Tuesday’s vote would normally mean the law was home and dry, it still needs to be adopted by the European Council, where member states – think Germany – could, if they so desire, opt not to back the deal. 

Wolters described the last-minute opposition to the CSDDD as “part of a wider trend”, where previous understandings between MEPs accepted as “good practice” are no longer being respected.

Part of the UK’s attempts to restore nature is through its recently agreed biodiversity net gain law that requires housing developers to improve the state of nature on or offsite by 10 per cent. Alex has spoken to a range of experts about the new rules. They suggest the 10 per cent target is decidedly unambitious when the UK, as a signatory of the Global Biodiversity Framework, has agreed to protect 30 per cent of land by 2030, and question whether the cash and workforce will be available to implement and monitor BNG projects. 

Elsewhere, the WWF is recommending that companies and financial institutions adopt the Science-Based Targets initiative framework to help the EU ensure net zero emissions goals are robust and the aims of the EU’s CSRD are met, while the EDHEC research institute has published a report showing infrastructure investors do not have the tools or the knowledge to assess the impact of physical climate risk on their portfolios.

Until tomorrow,

Philippa

Philippa Nuttall is the editor of Sustainable Views