Years were spent on agreeing rules to hold companies accountable for their environmental and social impacts, including the EU Corporate Sustainability Due Diligence Directive (CSDDD), the Corporate Sustainability Reporting Directive (CSRD), and more … [but] numerous Omnibus proposals have gone beyond [simplification], weakening sustainability rules instead.
The rules are good for all the reasons associated with protecting human rights and combating climate change …
Asian car makers lag behind in establishing systems to eliminate fossil fuels, environmental harms and human rights abuses from their supply chains. The latest Lead the Charge Leaderboard highlights this - where six of the top ten companies are European automakers. Chinese electric carmakers BYD, GAC and SAIC still do not disclose their scope 3 emissions from their supply chains …
SAIC’s risk assessments focus solely on business-related concerns like chip shortages, while GAC only discloses processes for business and environmental risk management. Grievance mechanisms for affected workers or communities - a requirement under CSDDD - are also largely missing, unlike among EU firms.
These same Chinese manufacturers are ramping up sales in the EU market - until now mostly through imports, and increasingly via local production in Hungary, Spain and beyond. Yet many of these companies are falling short of EU sustainability requirements. This poses not just a regulatory challenge, but a competitive one: under the Corporate Sustainability Due Diligence Directive, companies face consequences for non-compliance - including potential fines of at least 5% of annual turnover. If these rules are now weakened, we risk letting in lower-standard competition through the front door while failing to reward those who have played by the rules …
Let’s hope this will not come true as it goes in the wrong direction. As may experts agree, cutting EU regulation is a gift to China’s car makers