Latest news with #CorporateSustainabilityDueDiligenceDirective
Forbes
5 days ago
- Politics
- Forbes
Ombudsman Investigation Into EU Sustainability Reporting Bill Moves Forward
Teresa Anjinho In April, a group of climate change organizations filed a complaint with the European Ombudsman asserting that the European Commission failed to follow the proper process in drafting legislation to reduce sustainability reporting requirements. To the excitement of sustainability activists, on May 21, the Ombudswoman announced she was opening an official investigation. That investigation has now moved forward, with the official submission of questions to the Commission. However, given the timeline and limited authority of the Ombudsman, the inquiry will have little impact on the final outcome. In November, the new leadership of the European Commission proposed the Omnibus Simplification Package to reduce the scope of the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive. The proposal by the Commission was negotiated behind closed doors and largely held secret until the final draft was approved. The Commission's proposal was then sent to the Council and the Parliament. Each body will debate their respective positions, before the three enter into a trilogue to come to a final proposal. While the normal process of negotiating a new directive can takes years, it is expected that the final package will be adopted in the fall. The accelerated timeline has concerned some sustainability advocates who believe reforms deserve more study and public debate. In an effort to bring to thwart the reforms, in April, a complaint was filed to the European Ombudsman by 'eight civil society organizations': ClientEarth, Notre Affaire à Tous, Clean Clothes Campaign, European Coalition for Corporate Justice, Global Witness, Transport & Environment, Antislavery International and Friends of the Earth Europe. On May 21, Teresa Anjinho, the European Ombudswoman, announced an official inquiry into the complaint. The case is titled 'The European Commission's failure to comply with its 'Better regulation guidelines' in preparing a legislative proposal on corporate sustainability reporting and due diligence.' On June 16, the Ombudsman's office met with Commission staff to discuss the inquiry. Following the meeting, the Ombudsman announced she believed written responses were necessary. There are four main topics the Ombudsman wants addressed: the impact assessment, public consultation, the climate consistency assessment, and the Inter-Service Consultation. Under the EU's Better Regulation Guidelines, new legislation is required to go through a an assessment to determine what economic, environmental or social impacts the proposal may have. The Commission did not conduct an impact assessment for the simplification proposal. Addressing the absence of an impact assessment, the ombudsman stated, "While the legislative proposal in question would, in principle, have required a full-fledged impact assessment, the Commission did not conduct one, preparing instead an analytical document, in the form of a staff working document." "In its explanatory memorandum, the Commission justified the 'critical urgency' of the proposal, and the related derogation from the impact assessment requirement, with the need to maintain the competitiveness of EU businesses… However, the Commission did not indicate any sudden or unexpected event that would justify the urgency." Similarly, new proposals are required to go through a public consultation to allow stakeholders the opportunity to provide input. The Commission held meetings in February with a selected group of stakeholders, but did not open it to broader input. Addressing the absence of a public consultation, the Ombudsman stated. 'I understand that in this case the Commission considered that a public consultation was not required… nor was it feasible…."It is not clear how the stakeholder exchanges referred to in the explanatory memorandum meant that a public consultation would not have added new information, in particular considering that many stakeholders that could have contributed otherwise were not invited to participate in the February 2025 meetings." Addressing the absence of a climate consistency assessment, the Ombudsman stated, "in accordance with the European Climate Law, the Commission is required to conduct a climate consistency assessment of any draft measure or legislative proposal 'and include that assessment in any impact assessment accompanying these measures or proposals, and make the result of that assessment publicly available at the time of adoption'… It appears therefore that the Commission did not carry out a climate consistency assessment before adopting the legislative proposal in question, although the European Climate Law does not foresee any exemptions from conducting such an assessment." Finally, addressing the lack of the Inter-Service Consultation (ISC), the ombudsman stated the "Commission's rules of procedure foresee a formal ISC of 'the services with legitimate interest on account of the nature, subject-matter or impact of the draft act'. Normally, the services consulted in an ISC are given ten working days to review the proposal and to reply. 'In exceptional cases, and on duly justified grounds of urgency', the rules of procedure allow for the possibility of a Fast-Track ISC with a shortened time frame of 48 hours… For the proposal at hand, the ISC was concluded within 24 hours.' While the Ombudsman has the authority to conduct the investigation and produce a final report, authority to enforce recommendations is limited. 'The Ombudsman may be able to solve your problem simply by informing the institution concerned. If more is needed, every effort is made to reach an amicable solution that will put matters right. Should this fail, the Ombudsman can make recommendations to the institution. If these are not accepted, the Ombudsman can draw up a special report to the European Parliament, which must then take appropriate action.' However, once the report is sent to the Parliament, it becomes a political process. The report is sent to a committee that decides if further action is necessary. That committee can submit a motion for a resolution by the Parliament. That process can take months. Even if the Ombudsman finds the process was was flawed, the report will have minimal impact on the Omnibus package. The Commission was given a deadline of September 15 to respond to the questions. Following the Ombudsman's procedures, the final report may not be issued until the end of the year, after the reforms to sustainability reporting have been approved. The focus of the Ombudsman appears to be on future Omnibus proposals and ensuring the process is followed moving forward.
Reuters
22-07-2025
- Business
- Reuters
How Europe's ambition to lead on corporate human rights ran into the sand
July 21 - Just over a year ago, the European Union approved a directive that sought to usher in a new era of human rights protection across Europe. The Corporate Sustainability Due Diligence Directive (CSDDD) was meant to give investors more visibility on the risks throughout the value chain of investee companies and make non-compliant companies accountable to member-states and to victims of human rights or environmental harm, even in their operations outside Europe. It took five years of wrangling to agree the rules on corporate due diligence and in the end, just 5,400 companies – fewer than 1% of EU firms – and 900 international corporations that do significant business in the EU were expected to be impacted. Since November last year, however, legislators have sought to unpick it, amid heavy lobbying from industry groupings, which argued that the rules meant European companies could not compete with rivals in China and the U.S., where President Donald Trump is rolling back regulation and imposing tariffs on foreign goods. In February, the European Commission introduced the first in what would be a series of Omnibus packages, focused on sustainability and investment and billed as a recalibration of rules 'in a growth-friendly manner'. The Commission said that if implemented, its Omnibus proposals would mean total savings in annual administrative costs of 6.3 billion euros and would mobilise a further 50 billion euros of public and private sector investment in support of policy priorities. The wide-ranging proposals include giving companies an extra year, to 2028, to implement the CSDDD; limiting due diligence to direct – tier one – suppliers unless there is 'plausible information' to justify deeper investigation; and doing away with a harmonised civil liabilities regime, leaving member states to establish their own mechanisms and set their own penalties. Since the first Omnibus package was published, the European Council and the EU Parliament have both made further proposals to reduce the number of companies in scope, and their reporting requirements. The European Council, for example, wants to raise the CSDDD threshold from 1,000 employees and a turnover of 450 million euros to 5,000 employees and 1.5 billion euro turnover. One of the EU Parliament's proposals is to do away with companies' obligation to draw up climate-transition plans. As part of the Omnibus, the Commission also proposed reopening the Corporate Sustainability Reporting Standard (CSRD) under which companies would have to report on implementation of climate transition plans, and the EU Taxonomy. All three work together as a framework for investors providing meaningful information on risk. Both the European Council and EU Parliament have suggested further amendments to the scope and veracity of the CSRD. The proposals reflect wide-ranging criticism from lobby groups. The French Banking Federation had argued that significant divergences between the scope and requirements of the CSDDD and CSRD risk increasing the regulatory burden and that the CSDDD put European companies at a disadvantage compared with international competition. VCI, the trade group for the German chemicals industry, said that 'huge legal uncertainty and incalculable risk' associated with civil liability would likely lead to companies withdrawing from high-risk regions and markets. Opposition has been voiced in the U.S. too, with a bill introduced in the Senate that seeks to protect U.S. firms from the reach of the due diligence law. Pierre Garrault, senior policy adviser at the European Sustainable Investment Forum (Eurosif), says 'The Omnibus initiative now modifies potentially the core substance of these rules. But that's not what businesses and investors wanted. They wanted more guidance, more clarity and less duplication.' And he suggests that the proposed changes in the Omnibus legislation could defeat the main purpose of the CSDDD because just a few companies from a few member states would be in scope. 'That creates a lot of fragmentation in the way that companies can report on sustainability matters and establish their own processes on due diligence when the main objective was to create that EU-wide standardisation, and that single European baseline.' David Ollivier de Leth, a researcher at Netherlands-based Centre for Research on Multinationals (SOMO), shares those concerns. 'The whole point of this law is that you should look at the risks, and the risks are what should guide you, not the size of the company or (its) location.' With businesses potentially now only having to address adverse human rights impacts beyond tier one suppliers if they have 'plausible information' to act on, campaigners are concerned that the Commission's changes would mean companies simply turn a blind eye to potential harms. 'I think it is fair speculation to say (that) it might even incentivise companies not to look for that plausible information because what if I get it, then I might be liable for what I've discovered,' suggests Marion Lupin, policy officer at the European Coalition for Corporate Justice. While a big enough injustice might attract the attention of NGOs, she adds, 'you're very much outsourcing the risk-management to other stakeholders, whose job is not to survey value chains of multinationals. It's very problematic.' Another Omnibus amendment restricts due diligence further by limiting the information corporations can ask for from suppliers with fewer than 500 employees, the so-called VSME standard, a voluntary reporting standard for small- and medium-sized companies developed by the Commission's technical adviser on sustainability reporting. VSME allows companies to assert 'we don't know (about human rights risks in our supply chain), because we're not allowed to ask,' says SOMO's Ollivier de Leth. Ollivier de Leth says SOMO's study of seven major EU supermarket supply chains demonstrates just how much the tier one limitation guts the purpose of the CSDDD. It found that most firms' tier one suppliers were based in EU countries deemed to be at low risk of human rights violations. That is in contrast with the large proportion of more distant suppliers, which originate in countries with a high risk of human rights violations, such as deforestation and land rights abuses found in meat and soy chains, or child labour in cocoa supply chains. Campaigners are also concerned about the demise of harmonised civil liability, which would have ensured that the conditions under which a company can be held liable are the same in every member state. Instead, a hotch-potch of national rules potentially creates a legal minefield, argues the ECCJ's Lupin. Johannes Blankenbach, senior EU researcher at the Business and Human Rights Resource Centre, agrees: 'Harmonised civil liability is very important for remedy, and also as an incentive for a true level playing field among companies of quality due diligence beyond just ticking boxes.' Investing in thorough due diligence also protects companies themselves, he adds. Before the advent of the CSDDD, only a few European countries had implemented due diligence obligations based on international standards framed by the OECD and U.N. Guiding Principles. French law, for example, requires due diligence across the full value chain but is short on detail that can leave it open to interpretation in the courts, say campaigners. Germany's legislation, meanwhile, focuses only on tier one suppliers. That limit followed extensive corporate lobbying, but Blankenbach argues that the way companies have chosen to apply Germany's legislation so far has created the very bureaucracy they sought to avoid, with 'firms performing indiscriminate compliance exercises with all their tier one suppliers, sometimes flooding them with relatively meaningless surveys'. 'It's a bitter irony to see that tier one focus replicated in the Omnibus,' he adds. In April, legal charity ClientEarth and seven other campaign groups filed a complaint with the European Ombudsman, the EU's independent watchdog, accusing the Commission of 'maladministration' for bypassing proper impact assessment and excluding broad public participation in preparing the Omnibus package. Read more They also accused the Commission of consulting industry lobbyists in closed-door meetings before publishing its proposals. In July, the EU Ombudsman wrote to the Commission asking it to justify its decision-making process, and giving it until September to respond. A Commission spokesperson told journalists that swift changes had been needed since the reporting requirements already applied to some companies. "Businesses and member states urgently needed legal certainty to comply with the sustainability framework," the spokesperson said. Some companies and investors are pushing back against the Omnibus. Over 200 have so far signed an open letter stating that 'regulatory simplification can be achieved without compromising on the substance of sustainability rules or their significant benefits for businesses across the EU'. They include EDF, Vattenfall, Ingka Group and the Inter IKEA group, as well as pensions groups, insurers and asset managers – many of whom have already begun implementing and preparing for the due diligence legislation. A spokesperson for Inter IKEA Group and Ingka Group told The Ethical Corporation that it's important the CSDDD doesn't 'turn into a compliance without impact'. 'We advocate for maintaining a risk-based approach beyond our direct suppliers and ensuring that companies can legally access the information needed to identify, prevent and mitigate adverse impacts throughout their value chains.' How much weight those arguments have will become clear this autumn when the European Parliament finalises its position and negotiations between the Commission, European Council and EU Parliament begin. Businesses and investors who are preparing for the new legislation urgently want clarity. Will it come at the expense of rights holders?
Euronews
07-07-2025
- Politics
- Euronews
Eighteen EU countries call for EU Deforestation Law 'simplification'
Eighteen EU countries have asked the European Commission to start a process of "simplification" of the EU deforestation law and further postpone its implementation in a letter seen by Euronews on Monday. "We urge the European Commission to swiftly include the Deforestation Regulation in its simplification plans in order to ensure coordinated and effective implementation of the EUDR across the EU," the letter said. The communique was signed by the agriculture ministers of Austria, Bulgaria, Croatia, the Czech Republic, Estonia, Finland, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Poland, Portugal, Romania, Slovakia, Slovenia and Sweden. The European Commission has over the past few weeks already presented a range of simplification packages to amend pieces of legislation approved by the first Ursula von der Leyen Commission in the 2019-2024 mandate. These packages targeted the Corporate Sustainability Due Diligence Directive, as well as pieces of legislation related to the European Common Agricultural Policy, and the defence sector. "Pending the Commission's simplification proposals, it might be advisable to further postpone the date of application of the regulation," the letter also read. A spokesperson for the European Commission told reporters on Monday that they had not yet "located" the letter, adding however that the EU's executive has "done also a lot of effort already to simplify the regulation and the work, in a way, is still ongoing". The EU Deforestation Regulation (EUDR) is a law aimed at reducing the EU's impact on global deforestation. It entered into force in June 2023 and classifies countries according to their risk of deforestation in the production of seven commodities: cattle, cocoa, coffee, oil palm, rubber, soya, and wood. The European Commission decided to postpone its implementation to 30 December 2025 for large and medium-sized companies, and to 30 June 2026 for micro and small companies, following pressure from member states. In the letter, the signatory member states claim that the obligations placed on farmers, forest owners, and operators by the regulation are overly burdensome, especially for countries with little or no deforestation risk. They argue that the requirements are disproportionate to the regulation's goal of preventing deforestation and result in higher costs for both businesses and governments. The rules, the member states say, may also drive up raw material and production costs, increasing the risk that producers will move operations outside the EU. Criticism by civil society Civil society organisations have accused some EU lawmakers — including both member states and MEPs — of repeatedly attempting to undermine the legislation. Hannah Mowat, campaigns coordinator at Fern, told Euronews that there is a disconnect between the political and technical levels. "Competent authorities in many EU countries, including some that have signed this letter, say they are ready to implement the law,' she said. The signatories of the letter also undermined the concept of "degradation of forests", a phenomenon rising in Europe, Mowat explained. 'The agriculture ministers' letter states that European tree cover is rising, but ignores that Europe's forests are increasingly degraded. Tree farms are not forests, and across Germany, Austria, and more, large monoculture plantations have already collapsed due to disease, drought and overexploitation," Mowat told Euronews. "The EUDR would bring much-needed scrutiny to the monoculture model by requiring that forest products be legally produced and not contribute to the degradation of forests in Europe and abroad,' she concluded. 'This proposal is not a simplification, but rather a complication for all involved parties - including companies, who will be faced with a lack of legal clarity, further delays in the application of the law, and more burdens for those that have already set up systems for compliance" Anke Schulmeister-Oldenhove, WWF Europe manager on forests, told Euronews. "While paying lip service to stopping deforestation, ministers are in reality undermining one of the EU's flagship environmental laws, and turning a blind eye to the increasing deforestation rates globally and the impacts of climate change in the EU," she added.
Euronews
07-07-2025
- Politics
- Euronews
Nineteen EU countries call for EU Deforestation Law 'simplification'
Nineteen EU countries have asked the European Commission to start a process of "simplification" of the EU deforestation law and further postpone its implementation in a letter seen by Euronews on Monday. "We urge the European Commission to swiftly include the Deforestation Regulation in its simplification plans in order to ensure coordinated and effective implementation of the EUDR across the EU," the letter said. The communique was signed by the agriculture ministers of Austria, Bulgaria, Croatia, the Czech Republic, Estonia, Finland, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Poland, Portugal, Romania, Slovakia, Slovenia and Sweden. The European Commission has over the past few weeks already presented a range of simplification packages to amend pieces of legislation approved by the first Ursula von der Leyen Commission in the 2019-2024 mandate. These packages targeted the Corporate Sustainability Due Diligence Directive, as well as pieces of legislation related to the European Common Agricultural Policy, and the defence sector. "Pending the Commission's simplification proposals, it might be advisable to further postpone the date of application of the regulation," the letter also read. A spokesperson for the European Commission told reporters on Monday that they had not yet "located" the letter, adding however that the EU's executive has "done also a lot of effort already to simplify the regulation and the work, in a way, is still ongoing". The EU Deforestation Regulation (EUDR) is a law aimed at reducing the EU's impact on global deforestation. It entered into force in June 2023 and classifies countries according to their risk of deforestation in the production of seven commodities: cattle, cocoa, coffee, oil palm, rubber, soya, and wood. The European Commission decided to postpone its implementation to 30 December 2025 for large and medium-sized companies, and to 30 June 2026 for micro and small companies, following pressure from member states. In the letter, the signatory member states claim that the obligations placed on farmers, forest owners, and operators by the regulation are overly burdensome, especially for countries with little or no deforestation risk. They argue that the requirements are disproportionate to the regulation's goal of preventing deforestation and result in higher costs for both businesses and governments. The rules, the member states say, may also drive up raw material and production costs, increasing the risk that producers will move operations outside the EU. Criticism by civil society Civil society organisations have accused some EU lawmakers — including both member states and MEPs — of repeatedly attempting to undermine the legislation. Hannah Mowat, campaigns coordinator at Fern, told Euronews that there is a disconnect between the political and technical levels. "Competent authorities in many EU countries, including some that have signed this letter, say they are ready to implement the law,' she said. The signatories of the letter also undermined the concept of "degradation of forests", a phenomenon rising in Europe, Mowat explained. 'The agriculture ministers' letter states that European tree cover is rising, but ignores that Europe's forests are increasingly degraded. Tree farms are not forests, and across Germany, Austria, and more, large monoculture plantations have already collapsed due to disease, drought and overexploitation," Mowat told Euronews. "The EUDR would bring much-needed scrutiny to the monoculture model by requiring that forest products be legally produced and not contribute to the degradation of forests in Europe and abroad,' she concluded. 'This proposal is not a simplification, but rather a complication for all involved parties - including companies, who will be faced with a lack of legal clarity, further delays in the application of the law, and more burdens for those that have already set up systems for compliance" Anke Schulmeister-Oldenhove, WWF Europe manager on forests, told Euronews. "While paying lip service to stopping deforestation, ministers are in reality undermining one of the EU's flagship environmental laws, and turning a blind eye to the increasing deforestation rates globally and the impacts of climate change in the EU," she added.
![[Editorial] Sandbox, not straitjacket](/_next/image?url=https%3A%2F%2Fall-logos-bucket.s3.amazonaws.com%2Fkoreaherald.com.png&w=48&q=75){kind=small}
Korea Herald
03-07-2025
- Business
- Korea Herald
[Editorial] Sandbox, not straitjacket
To reclaim economic dynamism, South Korea must trade patchwork fixes for deregulation South Korea has long prided itself on its technological sophistication, a nation of 5G networks, semiconductor giants and integrated mobile ecosystems. Yet the legal and regulatory machinery governing its economy remains ill-suited to the demands of the industries it claims to champion. A modest but telling countermeasure has been the 'regulatory sandbox,' a policy tool that grants temporary exemptions from outdated laws, allowing innovative companies to test new services or products without being immediately stifled by red tape. Introduced in 2020, the system has yielded tangible, if limited, results. According to the Korea Chamber of Commerce and Industry, 518 firms that participated in the scheme between 2020 and May 2025 created 6,900 jobs and added 980 billion won ($722 million) in revenue. Most were small and medium-sized enterprises, underscoring how heavily rigid rules weigh on those least able to manage them. Yet the sandbox remains the exception, not the norm. Its impact is curbed by slow-moving bureaucracy, narrow scope and weak follow-through. Despite promising signals, successive Korean governments have failed to convert ad hoc relief into systemic reform. The global trend toward deregulation makes South Korea's regulatory stagnation even more conspicuous. Europe, once a champion of corporate oversight, is now retreating from some of its more burdensome interventions. France and Germany have jointly pressed the EU to shelve its proposed Corporate Sustainability Due Diligence Directive, citing the competitive strain it would impose. The EU is also reconsidering its approach to AI regulation, increasingly concerned about falling behind the US and China in strategic technologies. Emerging markets are acting just as decisively. Vietnam, for example, aims to cut corporate regulation by 30 percent in pursuit of an 8 percent growth target. South Korea, by contrast, is tightening legal frameworks just as its peers seek flexibility. The cost of this approach is no longer speculative. In the 2025 competitiveness rankings by the International Institute for Management Development, South Korea fell seven places to 27th overall. More strikingly, it dropped 21 places in the 'business efficiency' sub-index, a decline driven by lower productivity, reduced corporate adaptability and mounting internal hurdles. This is a clear warning that the regulatory environment is not merely lagging but actively undermining competitiveness. The drag on emerging industries underscores the risks. Drone logistics, autonomous driving and telemedicine — sectors advancing rapidly elsewhere — remain mired in legal uncertainty at home. The case of Tada, a homegrown ride-hailing platform hit by legislative hurdles, offers a cautionary tale. In South Korea, innovation is often not outpaced by the market but obstructed by the state. One proposal that warrants serious consideration is the 'mega sandbox,' a plan to let local governments establish experimental regulatory zones for high-potential sectors such as urban air mobility or AI. Backed by the KCCI and business leaders, the idea represents a step toward structural reform. But real change will require more than decentralization. It demands political willingness to tolerate risk, loosen central control and embrace a culture of experimentation. President Lee Jae Myung has pledged to eliminate rules born of administrative convenience rather than public need. Yet the country's recent history is littered with unfulfilled promises of reform. Regulation is not inherently counterproductive. Well-crafted rules protect markets, consumers and institutions. But frameworks that persist out of habit do more than hinder efficiency — they dissuade ambition. In a global economy defined by speed, adaptability and innovation, South Korea cannot afford to remain an economy where the space to imagine is narrower than the rules that constrain it. Policy must do more than referee. It must create the space to play.
