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illuminem summarises for you the essential news of the day. Read the full piece on ESG Today or enjoy below:
🗞️ Driving the news: The European Central Bank (ECB) has issued a strong warning against the EU Commission’s plan to exempt 80% of companies from the Corporate Sustainability Reporting Directive (CSRD)
• While supporting streamlined reporting, the ECB emphasized that removing most firms from the framework would jeopardize investor transparency, financial stability, and climate objectives
🔭 The context: The CSRD was introduced to drastically expand sustainability disclosures in the EU — from 12,000 to over 50,000 companies — by replacing the outdated Non-Financial Reporting Directive • However, the Commission’s Omnibus I package now proposes to raise the threshold to firms with over 1,000 employees and €50 million in turnover, drastically narrowing coverage
• This move comes amid wider deregulatory efforts that also target the CSDDD, ESRS, and CBAM frameworks
🌍 Why it matters for the planet: Reducing the CSRD’s scope could exclude many high-impact firms from disclosure, including significant GHG emitters and smaller financial institutions
• Without mandatory, standardized sustainability data, market actors cannot accurately assess climate and nature-related risks, and green capital flows may falter
• The ECB warns this could also heighten greenwashing and distort investment decisions
⏭️ What's next: The ECB urges policymakers to retain reporting requirements for companies with 500–1,000 employees through simplified standards
• It also recommends keeping key ESRS data points — especially those related to climate (S1) and biodiversity (S4) — and calls for sector-specific implementation guidelines to ensure comparability
• The Commission must now weigh these recommendations as part of ongoing Omnibus negotiations expected to continue into late 2025
💬 One quote: “ESG risks are not necessarily proportionate to an institution’s size,” the ECB noted, cautioning that smaller firms may still pose significant sustainability-related financial risks
📈 One stat: The proposed changes would remove 80% of covered companies — tens of thousands — from CSRD reporting obligation
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