After concluding the Corporate Sustainability Reporting Directive (CSRD) with the publication of reporting standards in 2023, the European co-legislators definitively adopted the Corporate Sustainability Due Diligence Directive (CSDDD) in 2024, more than two years after its presentation. Companies will now be required to prevent, mitigate and remedy their own human rights and environmental abuses as well as those in their value chains. However, pressure from employers and a number of major member states such as France and Germany – yet one of the few countries to have legislated on the subject – to water down the text at the beginning of the year already suggested a row back on sustainability.
A European political U-turn
This was subsequently confirmed, with an increasing number of attacks on the directives on the due diligence and non-financial reporting, even within the European institutions. With a right-wing movement inside the European Commission and Parliament following the European elections in June, priorities have changed. Competitiveness has risen to the top of the political agenda for the new term of office, with the corollary of reducing the administrative burden on businesses. So much so that, initially, employment and social rights, which were full responsibilities in the previous Commission, were no longer part of the portfolios.
In September, former European Central Bank President Mario Draghi submitted a report, commissioned by the Commission, using the CSRD as an example of what he believed should be avoided in order to boost productivity. The call did not go unheeded: two months later, at a meeting in Budapest, European Commission President Ursula von der Leyen announced the introduction of a text designed to lighten the burden on businesses. Despite the final adoption of the CSRD and CSDDD, they are due to be overhauled in an “omnibus directive”, to be presented on 26 February. Nonetheless, companies with more than 500 employees and a turnover in excess of €40 million will be required to publish their sustainability report at the beginning of the year, in line with this framework, which they have been working on for months.
More redundancy plans
Competitiveness was precisely the reason put forward by the continental employers’ federation BusinessEurope to justify not signing a political declaration on social Europe approved by European co-legislators and trade unions in March 2024. The organisation said at the time that declaration “hints at a regulatory route that cannot lead to reverse the decline in productive investment in Europe and halt the erosion of our industrial base on which many quality European jobs depend”. Later in the year, this decline took the form of numerous announcements of job cuts in major companies, particularly in industry. Michelin, Volkswagen, Renault, Danone and Bosch, for example, announced job cuts in France and Germany. The German government has reacted by increasing the maximum length of partial unemployment, while the Spanish executive announced in December that it would seek repayment of public aid from companies that relocate. This economic context may lead companies to be less ambitious when it comes to CSR: the Anglo-Dutch agri-food multinational Unilever, certified for its living wage policy, has brought its CSR department back under the aegis of communications, whereas it had previously been autonomous.