LONDON (AP) — A confidential document obtained by The Associated Press reveals that a flagship EU law aimed at pushing European companies towards net zero emissions is at risk of being significantly weakened by member states. The document suggests that firms may no longer be required to implement the goals of the Paris Agreement.
The Corporate Sustainability Due Diligence Directive, designed to eliminate environmental and human rights violations in business operations, was meant to ensure that companies align with the global temperature rise limit of 1.5 degrees Celsius. However, a leaked briefing from November 9th outlines a proposal that would exclude the entire financial sector from the law.
Banks and insurers in Europe are major contributors to global warming through their financing and insuring of oil and gas projects, as well as agribusinesses that contribute to deforestation. Nonprofits warn that the weakened proposal would only require companies to have plans to achieve low carbon targets, rather than actually deliver on them, leading to greenwashing.
The European Parliament, which advocates for strong legislation, is currently in a standoff with the Council of the European Union, composed of ministers from member countries who prefer less stringent provisions to protect their economies. Spain, holding the council’s presidency, is attempting to reach a consensus on the law’s version, with the leaked briefing outlining a proposal to exclude the financial sector.
Environmentalists and campaigners are concerned that excluding finance from the law may prevent its inclusion in the future, as the next European elections are scheduled for June 2024. The leaked briefing suggests that the EU Presidency now favors weaker regulations, which would require companies to show an “obligation of means” to align with the Paris Agreement, rather than an “obligation of results.”
Richard Gardiner of the World Benchmarking Alliance criticizes the exclusion of finance, stating that it goes against the views of the EU parliament, the Commission, and most member states, and questions the influence of large countries that cater to the financial sector’s lobbying needs. René Repasi, lead negotiator on the law’s financial clauses, blames France for the change and says a deal on finance was previously supported by all member states.
Campaigners argue that the proposed changes would weaken the law and render it unenforceable, allowing companies to greenwash their activities. The EU Council’s preferred version of the law would only require companies to adopt a plan aligned with the Paris Agreement, without the obligation to implement it. The leaked briefing suggests that the EU Presidency prefers the weaker regulation.
Ambassadors of member countries are set to discuss the new proposals, which will form the basis for final negotiations with the European Parliament. Once a compromise is reached, the law will need formal approval from both the parliament and council to become binding across the European Union.
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