Business and Investor Views on Proposed EU CSRD/CSDDD Changes
Businesses Supporting EU Sustainability Regulations Facing Challenges
The European Union is currently contemplating significant revisions to the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), with a focus on regulatory simplification and economic competitiveness [1][4]. These proposed changes have raised concerns among businesses and investors about their impact on sustainability progress and Europe's transition towards a net-zero economy.
Overview of Proposed Changes
The proposed changes involve raising applicability thresholds, aiming to reduce the number of companies required to comply. The Council suggests limiting CSRD requirements to companies with over 1,000 employees and €450 million net turnover, which would reduce the number of companies from approximately 43,000 to about 11,700 [3]. The European Parliament is considering an even higher threshold: 3,000 employees and €450 million in turnover, which would only cover around 3,000 companies [2][3][4]. For CSDDD, the Council proposes a threshold of 5,000 employees and €1.5 billion turnover [1][3].
Business and Investor Perspectives
While some businesses below the new thresholds may welcome the reduced compliance burden, many leading businesses and investors have expressed concerns. They argue that weakening the EU’s sustainability rules could damage Europe’s long-term competitiveness and growth prospects [3]. High-quality, timely sustainability reporting is seen as a key competitive advantage for operating in the EU, providing essential information for investors and supporting the transition to a net-zero, energy-secure economy [3].
Emily Murrell, Policy Director at IIGCC, emphasized:
"Access to timely, high-quality reporting to guide investor decisions can be a key competitive advantage of operating in the EU. We do not want to see this lost in the face of a pressing investment gap of EUR 750–800 billion by 2030 which is needed for the transition to a net zero and energy secure economy." [3]
Impact on the Net-Zero Transition
A major worry is that narrowing the scope of these directives will drastically reduce the number of companies providing sustainability disclosures, making it harder for investors and policymakers to track progress towards EU climate goals. The investment community relies on comprehensive, comparable data to allocate capital efficiently towards sustainable projects. Without robust reporting from a broad base of companies, the risk of underinvestment in the green transition increases, potentially jeopardizing Europe’s ability to meet its 2030 and 2050 climate targets [3].
Conclusion
While many European businesses may welcome regulatory simplification, leading investors and a significant portion of the business community are concerned that the proposed narrowing of CSRD and CSDDD could undermine Europe’s sustainability leadership, reduce the quality of ESG data available to markets, and impede progress towards net-zero goals [3]. The debate highlights a tension between reducing short-term compliance costs and maintaining the EU’s position as a global leader in sustainable finance and corporate accountability. The final shape of these reforms—expected to become law in late 2025 or early 2026—will be crucial in determining whether Europe can balance competitiveness with the urgency of the climate transition [1][3].
As we strive for a green, modern, and competitive Europe, it is essential to ensure that all businesses are part of this transition. Many businesses are already moving towards sustainability. For example, Signify has committed to a 2040 net-zero target and uses EU-aligned reporting to demonstrate progress on circularity, emissions, and responsible sourcing. Removing or weakening the requirement for transition plans in CSDDD sends the wrong message. Many European businesses are actively calling for strong, coherent sustainability rules, not less regulation, but better, simpler regulation to guide their transition.
- The concerns of leading businesses and investors regarding the proposed EU CSRD/CSDDD changes center on their potential impact on the sustainability progress and Europe's transition towards a net-zero economy.
- High-quality, timely sustainability reporting is viewed as a crucial competitive advantage for operating within the EU, offering essential information for investors and supporting the transition to a net-zero, energy-secure economy.
- In the light of an investment gap of EUR 750–800 billion needed for the transition to a net-zero and energy-secure economy by 2030, access to timely, high-quality reporting can significantly aid investors in making informed decisions.
- The European business landscape is evolving, with many businesses, such as Signify, already moving towards sustainable practices, demonstrating progress on circularity, emissions, and responsible sourcing through EU-aligned reporting.
- The urgency of the climate transition necessitates not only reducing regulation but also ensuring it is robust, coherent, and simple, empowering businesses to espouse sustainable-living, home-and-garden, and lifestyle principles, while ensuring the long-term competitiveness and growth of the European business sector in the field of sustainable finance.
