EU Council Agrees To Delay Sustainability Due Diligence Reporting For Batteries
The European Union is considering a series of simplification proposals to significantly rollback aspects of the European Green Deal. While focus has been on Omnibus I, the packaged focused on reducing sustainability reporting, the EU is working on other Omnibus proposals to reduce other green initiatives. Omnibus IV addresses the 2023 battery regulation that created a due diligence requirement for batteries imported into the EU. On June 19, the Council adopted the Commission's proposal, shifting focus to the Parliament.
In 2019, the EU adopted the European Green Deal to push towards the Paris Agreement's goal of reaching net zero greenhouse gas emissions by 2050. The deal included a series of proposals to regulate business, forcing them to take actions to lessen their environmental and climate impacts.
Most focus has been on a trilogy of directives that impacted most businesses in the EU. Adopted in 2020, the Taxonomy for Sustainable Activities created a classification system for business and investors to know what activities are considered green or climate friendly. In 2022, the EU adopted the Corporate Sustainability Reporting Directive to create requirements for businesses to report GHG emissions and other environmental, social, and governance actions. In 2024, they adopted the Corporate Sustainability Due Diligence Directive, adding additional reporting requirements, as well as legal liability, for companies in relation to their value chain.
Other directives were adopted to address specific issues or industries. The EU Battery Regulation was adopted in 2023 to address environmental concerns with battery production and disposal. The recent rise in electric vehicles and electric bicycles and scooters has caused a rise in battery production and consumption. While deemed necessary for the reduction of GHG emissions, for many activists, the damage caused by the manufacturing and disposal of batteries is in conflict with broader environmental goals. The EU battery regulation was designed to hold businesses accountable for damage caused by battery production, including along the supply chain and disposal.
In the announcement of the agreement, the Council stated "as part of the EU's battery regulation, adopted in 2023, battery producers are obliged to publicly report on their due diligence practices to prevent or reduce batteries' adverse impacts on the environment, including their waste management."
The proposal delays the implementation of the regulation from August 2025 to August 2027. This not only allows businesses time to adapt, but provides more time for the establishment of third-party verification bodies.
"In addition, the Commission intends to publish the due diligence guidelines one year before the obligations take effect to give timely guidance to businesses and help ensure a smoother implementation of the new rules. Finally, the Commission proposes to lighten the administrative burden of the due diligence rules by requiring companies to publish reports on their compliance every three years instead of annually."
Given the current political climate in the EU, the proposed reductions are comparatively timid. The development of the Green Claims Directive, legislation that could require businesses to verify the validity of environmentally friendly claims made in marketing, has been placed on hold. The scope of the CSRD and CSDDD will be drastically reduced, eliminating at least 80% of companies from having to report. Activists are concerned that a new committee on spending will cut funding to environmentally friendly and climate friendly NGOs that advocate for those issues.
The future of sustainability reporting and due diligence is uncertain in the European Union. To the dismay of climate activists and joy of business groups, green initiatives are facing a major reset to pre-2019 levels. It appears the EU battery regulation will survive, but with reduced reporting requirements. However, watch the Parliament proposal to see if conservative political parties push for a further reduction.
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