BusinessEurope tells EU lawmakers to revert to risk-based due diligence and rethink transition plan requirements

Key trade body outlines its position on the proposed EU omnibus

One of Europe’s biggest lobby groups is urging lawmakers to revisit their current plan to amend the bloc’s due diligence and sustainability reporting rules.

BusinessEurope, which represents 42 national trade bodies across 36 countries, laid out its position on the EU’s proposed ‘omnibus’, which seeks to simplify the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D).

The document calls for a return to risk-based due diligence principles, which BusinessEurope argues have been lost in the current revisions.

A risk-based approach would allow companies to focus on the parts of their supply chain that post significant environmental and social risks, rather than conducting low-level due diligence across all suppliers.

In the legislative proposal currently being discussed by co-legislators, the European Commission says companies covered by CS3D should only have to conduct default due diligence on their direct (Tier 1) suppliers.

For suppliers further along the chain, due diligence would only be required where there is “plausible information” to suggest a problem.

But BusinessEurope argues “plausible information” is too vague a term, and there is no need to distinguish between suppliers by tier.

It wants a risk-based approach to be adopted for all suppliers, “meaning that the focus should be on the most severe and salient risks, rather than every single risk, in the relevant parts of the chain of activities” it says.

Transition plans

The position paper also requests changes to CS3D’s position on climate transition plans.

The Commission wants to soften the law’s current requirement for companies to “put into effect” their transition plans, suggesting they should instead just have to demonstrate they’ve adopted “implementing actions”.

But BusinessEurope says “it must be clarified that the requirement to adopt implementing actions does not include an obligation to put the plan into effect/succeed in fulfilling the plan”.

“Consideration should be given to replacing ‘best efforts’ with the wording ‘reasonable efforts’”, the paper proposes.

It also calls for fewer powers to be granted to Member States to decide what transition plans should look like, pointing out that multiple EU laws require such plans and so there needs to be a more centralised template.