Green groups fight to keep value chain reporting in EU rules

A group of ESG investors and companies with more than $570 billion in assets and $80 billion in market capitalisation have called on the EU to maintain draft requirements for companies to report on sustainability matters across their entire value chain.

It comes after the EU’s first batch of draft disclosure rules were officially passed to the European Commission in November for adoption. The rules cover environmental performance, social (including value chain reporting) and governance, and will form the foundation of the EU’s upcoming bloc-wide reporting regime established by the Corporate Sustainability Reporting Directive (CSRD).

Investor signatories to the statement, which was coordinated by carbon disclosure platform CDP, include KBI Global Investors, Switzerland’s ESG-AM and de Pury Pictet Turrettini & Cie, France’s Ecofi and Sycomore AM, and Germany’s EB-SIM. Eurosif, the French SIF and the Responsible Business Forum in Poland also signed on.

The group said that the requirements in their current form would “raise the international bar for corporate transparency”, while helping companies gain a better understanding of material risks and opportunities.

Signatories stressed that the EU should not limit the scope of the rules any further, noting that the number of disclosure requirements and data points in the current batch had already been reduced substantially from initial drafts.

The rules could still undergo significant revisions before they enter into force. The Commission will consult on the standards among EU agencies and member states to decide on a final legislative text, which will then be subject to parliamentary and member state scrutiny ahead of adoption.

The deadline for the final legislative text is June.

The group also called for environmental impacts and risks to be addressed “holistically” through comprehensive reporting rules on biodiversity, water use and other areas.

CDP’s European director of policy engagement Mirjam Wolfrum said: “To uphold the EU’s commitment to a climate-neutral continent where nature is restored, the Commission must approve ambitious reporting standards… These disclosure rules are essential to delivering capital markets the comparable data and insights needed to finance the green transition.”

The next batch of EU rules to be put forward will set sector-specific standards for five industries covered by the Global Reporting Initiative (agriculture, coal mining, mining, and fossil fuels), and five high-impact sectors (energy production, road transport, motor vehicle production, textiles and food and beverages).