This week’s EU Omnibus developments

The European People’s Party (EPP) looks set to side with the far right in a vote next week, meaning Parliament will push for aggressive reductions to the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CS3D) during negotiations with co-legislators.

According to Politico, the EPP submitted a proposal on Wednesday that closely aligns with the demands of the Patriots for Europe and Europe of Sovereign Nations parties.

That’s likely to mean that, among other cuts, Parliament will seek a €450m turnover and 1,750 employee threshold for CSRD and the deletion of climate transition plans.

The update comes after MEPs failed to agree on a final position on the Omnibus two weeks ago, during its first full vote.

As the dominant group in Parliament, the EPP then had to decide whether to ally more closely with colleagues on the centre-left or the far-right in order to secure a majority this time around.

The vote will take place on Thursday.

US continues its attack

The US continues to attack the EU sustainability agenda, with letters emerging this week from 16 Attorneys General to some of the world’s biggest companies.

Microsoft, Google and Meta were among those to receive warnings that complying with CSRD and CS3D was potentially “unlawful in the United States” and could trigger “lawsuits and government enforcement actions”.

The letters were sent over the summer.

EU climate target

Elsewhere on sustainability, Member States signed-off on a watered-down 2040 emissions reduction target for Europe on Wednesday.

After a marathon 18-hour negotiating session, the Council of the EU agreed its position on the bloc’s flagship climate law, paving the way for an agreement with the Commission and Parliament.

The Commission originally proposed a 90% cut in emissions by 2040, compared with 1990 levels, but has had to make significant concessions to appease some governments.

As well as allowing countries to using carbon credits to meet up to 10% of their targets under the new plans, governments are expected to be permitted to review the goals every two years to make sure they aren’t causing economic challenges.

The EU also agreed its new Nationally Determined Contribution this week, promising to reduce its emissions by between 66.3% and 72.5% by 2035.

Leaked SFDR revisions

And a leak of the new Sustainability Finance Disclosure Regulation (SFDR) has been circulating this week, which shows how the law – which seeks to bring more clarity to the world of sustainable investing – will be revised.

In a sweeping overhaul, the current proposal suggests that the taxonomy should play a much smaller role in what counts as ‘green’ under the rules, and there will be more emphasis on how private finance supports projects that drive social and environmental impact and the transition to a low-carbon economy.