EU corporate sustainability regulations face potential loosening, prompting a warning from Lagarde to exercise caution.
Christine Lagarde, the President of the European Central Bank (ECB), has expressed her concerns about proposed changes to the corporate sustainability reporting requirements (CSRD) and the corporate sustainability due diligence directive (CSDDD) in a letter to European parliamentarians.
The concerns stem from an EU omnibus regulation proposal, initiated in November 2021, aimed at streamlining and aligning Environmental, Social, and Governance (ESG) reporting rules. The proposal moves to align the CSRD with the CSDDD and removes around 80% of companies from the scope of the CSRD rules, applying reporting only to companies with over 1,000 employees and a turnover of €50 million or a balance sheet of more than €25 million.
Lagarde is particularly concerned that these amendments could hinder the Eurosystem's ability to implement measures aimed at incorporating climate change considerations into its monetary policy framework. She believes that climate change has profound implications for price stability through its impact on the structure and cyclical dynamics of the economy and financial system.
The ECB has already taken steps to manage financial risk from climate change. For instance, it has added a climate factor into its collateral framework, which allows banks to pledge assets to guarantee loans. However, Lagarde fears that the proposed changes could potentially weaken transparency, causing concern among some investors and companies.
Moreover, the EU's ambitions to spur private investment in green projects could be curtailed by the proposed changes to the reporting rules. Delays to the adoption of the CSRD into the national laws of member states could also pose a problem, according to Lagarde.
In a positive development, the European Commission has proposed that companies could report on a voluntary basis using sustainable reporting standards developed by the EU's standards body, the European Financial Reporting Advisory Group (EFRAG). The Commission also announced on March 27, 2025, that EFRAG was tasked with simplifying the European Sustainability Reporting Standards (ESRS) as part of the EU Omnibus regulation to simplify corporate sustainability reporting concepts.
Other omnibus packages to streamline other rules may follow later in 2025. This article was last updated on August 21, 2025. It's important to note that the EU omnibus proposal also postpones reporting requirements for companies set to report in 2026 or 2027 by two years.
In conclusion, Christine Lagarde's letter highlights the potential impact of the proposed changes on the Eurosystem's ability to implement measures related to climate change. The concerns raised underscore the importance of maintaining transparency and supporting green investment in the EU.
Read also:
- Understanding Hemorrhagic Gastroenteritis: Key Facts
- Stopping Osteoporosis Treatment: Timeline Considerations
- Tobacco industry's suggested changes on a legislative modification are disregarded by health journalists
- Expanded Community Health Involvement by CK Birla Hospitals, Jaipur, Maintained Through Consistent Outreach Programs Across Rajasthan
