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April 24, 2024

Editor’s note: MEPs give EU CSDDD the go-ahead

MEPs have finally given the green light to a watered-down Corporate Sustainability Due Diligence Directive, though it still needs rubber-stamping by EU member states © AFP via Getty Images
MEPs have finally given the green light to a watered-down Corporate Sustainability Due Diligence Directive, though it still needs rubber-stamping by EU member states © AFP via Getty Images

The latest edition of our Sustainable Views newsletter

Dear reader,

After much to-ing and fro-ing, members of the European parliament have finally given the green light to a watered-down EU Corporate Sustainability Due Diligence Directive. Campaigners are determined to see the decision as a win, even if the law is considerably less ambitious than originally proposed. 

However, it is not time for them to celebrate just yet. The CSDDD still needs rubber-stamping by EU member states and putting the demands of the directive into action will be far from easy. A survey by law firm DWF shows EU and UK business leaders believe at least half of the supply chains will not comply with the CSDDD if and when it comes into force in 2027. 

Robert Eccles, ESG expert and visiting professor at the University of Oxford’s Saïd Business School, tells me: “The biggest challenge from the CSDDD is that it achieves its goal of economic growth in addition to its human and environmental objectives. The only way this can happen is through innovation and business model transformation, otherwise it will become a costly compliance exercise with economic consequences, even if it achieves its sustainability objectives.” 

He also insists on the importance of large companies working with their small suppliers “to avoid economic pain in the supply chain, which will happen if they simply give up on them”.

We will bring you the full story on the CSDDD vote, and a round up of all ESG-related votes taken by MEPs in Strasbourg on Sustainable Views later today.

Yesterday, ahead of the day’s voting, outgoing green MEP Philippe Lamberts expressed his deep concern about the future of the EU Green Deal and, in no uncertain terms, slammed his fellow EU policymakers for their general lack of action on improving the state of the environment in Europe. 

“I am angry. Yes, I am angry,” he told a briefing. “Here are some of the facts: soil, air, water are highly polluted in Europe, so much so that actually you can’t even have bottled water that is clean.”

Negotiations are still ongoing, led by Belgium as holder of the rotating EU Council presidency, to try to get member states to approve the Nature Restoration Law before the June European parliament elections. Belgian Prime Minister Alexander de Croo has been accused of trying to kill the law

Lamberts was also scathing about new EU fiscal rules signed off by MEPs on Tuesday, describing them as “absolute bullshit”, creating “[no] space for the investment we need”. By approving such rules, MEPs on the left and right were guilty of a “dereliction of duty”, he said.

And there’s no let up in the tension, with the vote on changes to the Common Agricultural Policy having been pushed to the end of today. Lamberts urged MEPs, before deciding whether to back proposals to weaken environmental measures, to consider it was not possible, in his view, to please family farmers, dairy farms and multinationals like French multinational dairy Lactalis, or French agro-industrial group Avril. 

“It is either or, you have to pick your side,” he commented. “You can’t protect family farms and protect those who screw them.”

From London, Alex reports on the announcement from the Financial Conduct Authority that rules designed to help investors understand the sustainability of UK-based funds could be expanded to include portfolio managers, and that its new anti-greenwashing rule will come into force at the end of May. Various experts he has spoken to are worried about the timetable proposed for implementing the changes.

“The tricky part … is the very tight timeframe,” says law firm Linklaters financial regulation partner Raza Naeem. “The FCA expects UK portfolio managers to comply with the naming and marketing rules from December 2 … when in fact the final rules will only be published in the second half of 2024.”

Alex also reports on an event hosted by non-profit Renovate Europe and consultancy Climate Strategy & Partners in which Czech environment minister Petr Hladik called for an “EU-wide facility” that mixes public and private capital to accelerate the renovation of housing. Under the recently agreed EU Energy Performance of Buildings Directive, the aim is for new buildings to be zero emission from 2030 and the whole of the EU building sector to be climate neutral by 2050.

Finally, a report from Planet Tracker concludes chemical companies have “ambition” towards a net zero transition but their plans are not yet “actionable” and “robust”. The non-profit ranked companies on their climate transition plans. French company Air Liquide came out top with commitments to reduce Scope 1, 2 and 3 emissions, while BASF came out bottom. The report says BASF’s plan relies on “unproven technologies such as CCS [carbon capture and storage] and process electrification”, which puts its 2050 net zero target “at risk”.

Until tomorrow,

Philippa

Philippa Nuttall is the editor of Sustainable Views 

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