The latest edition of our Sustainable Views newsletter
Dear reader,
“It ain’t over ‘til it’s over,” crooned Lenny Kravitz back in 1991. I am not sure whether the American singer has been linked to EU legislation before, but the song popped into my head this morning as I sat down to write about the state of affairs around the EU Corporate Sustainability Due Diligence Directive.
This week, the so-called trialogue on the directive has been taking place to hammer out the final details of the law, after a provisional agreement was struck between the European Commission, parliament and EU member states in December. At the end of last year, a compromise seemed to have been found that would satisfy all countries, but the German liberals seem to have decided otherwise.
German government coalition member the Free Democratic party has made clear in recent days its unhappiness with the proposed law, though people close to the negotiations tell me Berlin has not yet agreed an official position on how it will vote in the European Council on February 9.
While Germany was the biggest country kicking up a fuss, other governments — Sweden, the Czech Republic and Estonia — suggested they were, at the eleventh hour, not really in favour of the CSDDD either and likely to vote against it, sources tell me. Their biggest beef is with the directive’s rules on penalties and civil liability for those who infringe its obligations.
“The fact Germany is even raising the question of whether they will support the CSDDD is egregious and unsavoury when all member states have had a role in shaping the text,” Marion Lupin from the European Coalition for Corporate Justice tells me crossly, noting that Article 22 on civil liability was “heavily rewritten to suit Germany”.
“It is very damaging for the EU legislative process for Germany to flip-flop like this at the last moment,” she continues. “We hope [Chancellor Olaf] Scholz will have the courage to defend the law.”
Italy also seems to be having a wobble, in particular around the law’s call for climate transition plans. Where the country stands exactly appears clear to no one, but how Giorgia Meloni’s government votes could decide whether the bill passes or not next month, sources suggest.
Despite all this uncertainty, Spain, the previous holder of the six-month EU presidency under which the provisional agreement was negotiated, remains optimistic the deal will, ultimately, be signed off, I am assured.
“This is a unique opportunity,” insists Richard Gardiner from the World Benchmarking Alliance. If countries let go of the CSDDD now due to short-term political interests, it is unlikely to ever see the light of day.”
Or as Kravitz would have said: “So much time wasted. Playing games.”
After covering regulation changes in the US and Australia earlier this week, Alex takes a look at what’s happening in Japan with the Tokyo Stock Exchange’s recent update of its governance rules, and reports on how the TSE hopes its monthly listing of compliant companies will persuade others to follow.
Meanwhile, a report from the London Stock Exchange Group suggests a lack of consensus on which categories should be regarded as material is making it harder for companies to report Scope 3 emissions.
And among the 10 trends highlighted by data provider ISS ESG as expected to affect investor returns and engagement in 2024, artificial intelligence, the EU deforestation law and increasingly fragmented ESG laws get top billing.
Until tomorrow,
Philippa
Philippa Nuttall is the deputy editor of Sustainable Views