Fixing the flaws in the CSRD, yes. But undoing, in five weeks, environmental standards that took years to negotiate and implement is neither strategic nor fair, argues Géraldine Poivert, founder of (RE)SET.
By Géraldine Poivert (President of (RE)SET)
Published on Mar 3, 2025 at 07:05
Taking the omnibus is never the shortest way to get from one place to another... The draft directive the European Commission is about to present could, according to its critics, mark an acceleration in the unravelling of the Green Deal and a slowdown in the environmental and economic transition of European companies, whose pace was already cautious. Conversely, in the view of its initiators, this directive could save the Old World's competitiveness.
As in any negotiation set to be delicate, convenient "leaks" feed the media. In reality, as of today, we do not know what the Commission will actually present. Nevertheless, thanks to the "leaks" and recent statements by Commission President Ursula von der Leyen, some key ideas are emerging, some good, others less so.
Issues of principle and method
The omnibus directive is part of the so-called "Competitiveness Compass" strategy presented by the Commission on January 29. It demands, notably, a "simplification shock". Our companies would allegedly be disadvantaged in global competition by the avalanche of standards they must comply with, partly due to the Green Deal. Favorite targets of the critics: CSRD, CSDDD (known as CS3D), and the taxonomy. Acronyms and concepts that few readers of these lines understand, which is part of the problem. To simplify, precisely, let's say that CSRD, CS3D, and the taxonomy constitute the "sustainability compass" for companies. "Competitiveness Compass" versus "Sustainability Compass"—once again, an attempt is made to pit economy against ecology, which, according to many experts and transition actors, including the author of these lines, is a mistake! Because one cannot (sustainably) exist without the other, precisely.
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From what we believe we know, the omnibus draft directive has several major drawbacks. First, on principle: changing the rules in the middle of the game is not very "fair-play" for the top performers, countries and companies, who will feel like they've been made fools of. Regarding CSRD, thousands of European companies have complied with the law: they have identified their risks and opportunities and are currently drafting their sustainability reports based on 2024 data.
There's also a drawback in terms of method: European officials and a few business representatives, selected on debatable criteria, are given five weeks to undo and redo what took five years to negotiate line by line at the European level.
The compass no longer points anywhere
Finally, substantive drawbacks. Some leaks suggest, again regarding the CSRD, that they might reconsider the very concept of double materiality analysis – meaning, simplifying, identifying the consequences of a company's actions on its environment, but also of that environment on the company itself – and eliminate the obligation to devise a strategy for improvement. This would strip the CSRD of all its meaning : the compass would no longer point anywhere.
"We are changing the rules of the game in the middle of the match, which isn't very 'fair-play' for the top performers."
We also hear that CS3D could be postponed "sine die," a "Community" way of saying "cancelled." CS3D is an enhanced version of the current duty of vigilance, which would make companies responsible, including criminally, for their actions and their consequences across the entire value chain. This would deprive us of a valuable tool to prevent major ecological disasters or combat child labor in subcontractor's subcontractors…
Let's dream a little. The omnibus directive could, on the contrary, provide an opportunity to revisit the original flaws of these texts. For example, one could only applaud a reduction in the number of criteria and indicators used for CSRD – it can require over 10,000 for some companies. Applaud, also, a revision of certain thresholds or deadlines to ease the burden on small, medium, and intermediate-sized companies that are facing concrete difficulties in meeting the requirements. Applaud, finally, the alignment and consistency among the different texts.
In short, correct rather than discard. One must not throw the baby out with the bathwater.
Géraldine Poivert is the founder and CEO of (RE)SET, a consulting firm dedicated to environmental and economic transition, and a France 2030 ambassador.
