The European Union’s decision to dilute its corporate sustainability rules could hurt the bloc’s efforts to fight climate change and risks rewarding companies with a poor track record, environmental NGOs and clean energy advocates say.
In a deal clinched in the early hours of Tuesday, EU leaders, the European Commission and the Parliament agreed a series of amendments to the Corporate Sustainability Due Diligence Directive (CSDDD), which will require larger companies to identify and address any environmental or human rights violations in their supply chains.
The amendments, which still need formal approval by the Parliament and EU member states, mean the due diligence requirements will apply to far fewer companies than initially targeted and maximum penalties will be reduced from 5% to 3% of a company’s annual global turnover.
In another change, the EU also scrapped a requirement for companies to publish climate transition plans setting out how they would make their business model compatible with the Paris Agreement.
The EU Commission said the changes, which follow months of corporate lobbying, US pressure and interventions by France and Germany, will remove all requirements for many smaller companies and introduce greater flexibility for larger companies, which will help to ease administrative burdens on businesses and drive investment.
But climate campaigners and clean tech industry representatives said the watered down rules were a setback for European efforts to clean up supply chains and reduce emissions.
“By deleting the climate transition plan implementation, the EU is weakening the key legislative frameworks for businesses to prepare for climate risks and global challenges that can severely affect their operations and value chains,” said Julia Otten, who works on corporate due diligence at Frank Bold, a sustainability NGO and law firm.
“This is counter-productive for businesses, weakens accountability, and jeopardises the EU’s own plans and objectives on climate and the industrial transition,” she added.
“Extremely disappointing”
Industry leaders in clean energy technologies say that the changes undermine their sector’s climate efforts and risk putting companies that prioritise sustainability at a disadvantage.
Rachel Owens, CEO of the Solar Stewardship Initiative, a multistakeholder scheme that has set out standards for what transparent and sustainable solar value chains should look like, told Climate Home News the move was “extremely disappointing”.
Requiring companies to set out their climate transition plans would have demonstrated that the production of solar panels and other renewable energy technologies and the energy they generate have much lower emissions than their fossil fuel alternatives, she said.
For Maurice Loosschilder, global head of sustainability at Signify – a multinational company that manufactures LED lighting systems that help reduce energy consumption – the removal of the climate transition plans from the law will make it more difficult to align businesses and their supply chains with the EU’s climate goals and could reduce incentives for innovation.
Because of its large size, Signify still falls under the law’s requirement. But Loosschilder said he was concerned that the company could lose its competitive edge when faced with small companies for which the same sustainability rules do not apply.
Intense lobbying
The agreement reached on Tuesday followed intense lobbying by industry and governments.
In a letter addressed to EU leaders, the US and Qatar warned that investment and energy supplies to the EU would be harmed if the CSDDD came into effect in its original form.
Documents obtained by the Amsterdam-based Centre for Research on Multinational Corporations (Somo) show how 10 major companies lobbied to dilute the regulation. This included oil and gas majors ExxonMobil, Chevron and TotalEnergies as well as metals and minerals producer Nyrstar, a subsidiary of commodity trading giant Trafigura Group.
Total Energies defended its advocacy in Brussels and in European capitals as being “in full compliance with applicable laws and regulations”. The other companies did not respond to Somo’s requests for comment.
NGO Global Witness accused EU leaders of giving in to lobbying by the fossil fuel industry.
“Major oil and gas giants will now be able to dodge their responsibility to act on [the] climate, largely thanks to intense US political and corporate pressure,” Beate Beller, a senior campaigner at Global Witness, told Climate Home News.
The EU’s about-face also weakens efforts to clean up the supply chains of technologies needed for the energy transition such as electric vehicles, batteries and solar panels.
“Clean tech cannot be ‘clean’ if the raw materials behind it are mined under weakened standards. This is what made the spirit of the CSDDD so promising: it paired climate transition plans to cut fossil-fuel dependence with robust human-rights and environmental due diligence across clean-tech supply chains,” she added.
Lower bar on supply chain oversight
The rules will now only apply to companies established in the EU with at least 5,000 employees and a net global turnover of 1.5 billion euros. It had originally applied to companies with at least 1,000 employees and turnover of 450 million euros. Member states have until July 2028 to transpose the requirements into national law.
When assessing their supply chains, companies will need to follow a risk-based approach and focus on areas that carry the biggest potential for harm. For example, an EV maker might focus on the production of the battery, which requires a range of different minerals whose extraction and processing carry high risks.
However, companies are no longer required to carry out comprehensive mapping of their direct and indirect suppliers. Instead, they will need to conduct “a general scoping exercise” based on “reasonably available information”.
Johannes Blankenbach, a senior researcher at the Business and Human Rights Centre, told Climate Home News that it is important that companies identify risks beyond their direct suppliers.
That’s because the most severe risks typically lie further up the supply chain, for example, where raw materials are sourced or extracted from the ground, he said.
In addition, harmonised rules across the EU to allow victims of harms to take companies to court have been removed, which will make it more difficult for communities to find legal remedies, Blankenbach added.
While the EU Commission said the less onerous requirements should help drive investment, Sonia Dunlop, CEO of the Global Solar Council, a trade body for the solar industry, said investors in solar farms wanted guarantees about the origin of solar panels and battery storage equipment.
“They want to know where it was made, and they want to know that it was properly made according to the highest environmental, social and governance standards,” she said, citing industry initiatives to boost supply chain transparency and standards such as the Solar Stewardship Initiative.
She said the initiative had been spurred by both the EU’s plan to tighten due diligence laws as well as industry concerns over the use of forced labour in the production of polysilicon used in solar panels in China’s Xinjiang region.
The post EU weakening of corporate sustainability rules ‘jeopardises’ climate action, critics say appeared first on Climate Home News.
EU weakening of corporate sustainability rules ‘jeopardises’ climate action, critics say
Climate Change
Big fishing nations secure last-minute seat to write rules on deep sea conservation
As a treaty to protect the High Seas entered into force this month with backing from more than 80 countries, major fishing nations China, Japan and Brazil secured a last-minute seat at the table to negotiate the procedural rules, funding and other key issues ahead of the treaty’s first COP.
The Biodiversity Beyond National Jurisdiction (BBNJ) pact – known as the High Seas Treaty – was agreed in 2023. It is seen as key to achieving a global goal to protect at least 30% of the planet’s ecosystems by 2030, as it lays the legal foundation for creating international marine protected areas (MPAs) in the deep ocean. The high seas encompass two-thirds of the world’s ocean.
Last September, the treaty reached the key threshold of 60 national ratifications needed for it to enter into force – a number that has kept growing and currently stands at 83. In total, 145 countries have signed the pact, which indicates their intention to ratify it. The treaty formally took effect on January 17.
“In a world of accelerating crises – climate change, biodiversity loss and pollution – the agreement fills a critical governance gap to secure a resilient and productive ocean for all,” UN Secretary-General António Guterres said in a statement.
Julio Cordano, Chile’s director of environment, climate change and oceans, said the treaty is “one of the most important victories of our time”. He added that the Nazca and Salas y Gómez ridge – off the coast of South America in the Pacific – could be one of the first intact biodiversity hotspots to gain protection.
Scientists have warned the ocean is losing its capacity to act as a carbon sink, as emissions and global temperatures rise. Currently, the ocean traps around 90% of the excess planetary heat building up from global warming. Marine protected areas could become a tool to restore “blue carbon sinks”, by boosting carbon absorption in the seafloor and protecting carbon-trapping organisms such as microalgae.
Last-minute ratifications
Countries that have ratified the BBNJ will now be bound by some of its rules, including a key provision requiring countries to carry out environmental impact assessments (EIA) for activities that could have an impact on the deep ocean’s biodiversity, such as fisheries.
Activities that affect the ocean floor, such as deep-sea mining, will still fall under the jurisdiction of the International Seabed Authority (ISA).
Nations are still negotiating the rules of the BBNJ’s other provisions, including creating new MPAs and sharing genetic resources from biodiversity in the deep ocean. They will meet in one last negotiating session in late March, ahead of the treaty’s first COP (conference of the parties) set to take place in late 2026 or early 2027.
China and Japan – which are major fishing nations that operate in deep waters – ratified the BBNJ in December 2025, just as the treaty was about to enter into force. Other top fishing nations on the high seas like South Korea and Spain had already ratified the BBNJ last year.
Power play: Can a defensive Europe stick with decarbonisation in Davos?
Tom Pickerell, ocean programme director at the World Resources Institute (WRI), said that while the last-minute ratifications from China, Japan and Brazil were not required for the treaty’s entry into force, they were about high-seas players ensuring they have a “seat at the table”.
“As major fishing nations and geopolitical powers, these countries recognise that upcoming BBNJ COP negotiations will shape rules affecting critical commercial sectors – from shipping and fisheries to biotechnology – and influence how governments engage with the treaty going forward,” Pickerell told Climate Home News.
Some major Western countries – including the US, Canada, Germany and the UK – have yet to ratify the treaty and unless they do, they will be left out of drafting its procedural rules. A group of 18 environmental groups urged the UK government to ratify it quickly, saying it would be a “failure of leadership” to miss the BBNJ’s first COP.
Finalising the rules
Countries will meet from March 23 to April 2 for the treaty’s last “preparatory commission” (PrepCom) session in New York, which is set to draft a proposal for the treaty’s procedural rules, among them on funding processes and where the secretariat will be hosted – with current offers coming from China in the city of Xiamen, Chile’s Valparaiso and Brussels in Belgium.
Janine Felson, a diplomat from Belize and co-chair of the “PrepCom”, told journalists in an online briefing “we’re now at a critical stage” because, with the treaty having entered into force, the preparatory commission is “pretty much a definitive moment for the agreement”.
Felson said countries will meet to “tidy up those rules that are necessary for the conference of the parties to convene” and for states to begin implementation. The first COP will adopt the rules of engagement.
She noted there are “some contentious issues” on whether the BBNJ should follow the structure of other international treaties such as the Convention on Biological Diversity (CBD), as well as differing opinions on how prescriptive its procedures should be.
“While there is this tension on how far can we be held to precedent, there is also recognition that this BBNJ agreement has quite a bit to contribute in enhancing global ocean governance,” she added.
The post Big fishing nations secure last-minute seat to write rules on deep sea conservation appeared first on Climate Home News.
Big fishing nations secure last-minute seat to write rules on deep sea conservation
Climate Change
Climate at Davos: Energy security in the geopolitical driving seat
The annual World Economic Forum got underway on Tuesday in the Swiss ski resort of Davos, providing a snowy stage for government and business leaders to opine on international affairs. With attention focused on the latest crisis – a potential US-European trade war over Greenland – climate change has slid down the agenda.
Despite this, a number of panels are addressing issues like electric vehicles, energy security and climate science. Keep up with top takeaways from those discussions and other climate news from Davos in our bulletin, which we’ll update throughout the day.
From oil to electrons – energy security enters a new era
Energy crises spurred by geopolitical tensions are nothing new – remember the 1970s oil shock spurred by the embargo Arab producers slapped on countries that had supported Israel during the Yom Kippur War, leading to rocketing inflation and huge economic pain.
But, a Davos panel on energy security heard, the situation has since changed. Oil now accounts for less than 30% of the world’s energy supply, down from more than 50% in 1973. This shift, combined with a supply glut, means oil is taking more of a back seat, according to International Energy Agency boss Fatih Birol.
Instead, in an “age of electricity” driven by transport and technology, energy diplomacy is more focused on key elements of that supply chain, in the form of critical minerals, natural gas and the security buffer renewables can provide. That requires new thinking, Birol added.
“Energy and geopolitics were always interwoven but I have never ever seen that the energy security risks are so multiplied,” he said. “Energy security, in my view, should be elevated to the level of national security today.”
In this context, he noted how many countries are now seeking to generate their own energy as far as possible, including from nuclear and renewables, and when doing energy deals, they are considering not only costs but also whether they can rely on partners in the long-term.
In the case of Europe – which saw energy prices jump after sanctions on Russian gas imports in the wake of Moscow’s invasion of Ukraine – energy security rooted in homegrown supply is a top priority, European Commission President Ursula von der Leyen said in Davos on Tuesday.
Outlining the bloc’s “affordable energy action plan” in a keynote speech at the World Economic Forum, she emphasised that Europe is “massively investing in our energy security and independence” with interconnectors and grids based on domestically produced sources of power.
The EU, she said, is trying to promote nuclear and renewables as much as possible “to bring down prices and cut dependencies; to put an end to price volatility, manipulation and supply shocks,” calling for a faster transition to clean energy.
“Because homegrown, reliable, resilient and cheaper energy will drive our economic growth and deliver for Europeans and secure our independence,” she added.
Comment – Power play: Can a defensive Europe stick with decarbonisation in Davos?
AES boss calls for “more technical talk” on supply chains
Earlier, the energy security panel tackled the risks related to supply chains for clean energy and electrification, which are being partly fuelled by rising demand from data centres and electric vehicles.
The minerals and metals that are required for batteries, cables and other components are largely under the control of China, which has invested massively in extracting and processing those materials both at home and overseas. Efforts to boost energy security by breaking dependence on China will continue shaping diplomacy now and in the future, the experts noted.
Copper – a key raw material for the energy transition – is set for a 70% increase in demand over the next 25 years, said Mike Henry, CEO of mining giant BHP, with remaining deposits now harder to exploit. Prices are on an upward trend, and this offers opportunities for Latin America, a region rich in the metal, he added.
At ‘Davos of mining’, Saudi Arabia shapes new narrative on minerals
Andrés Gluski, CEO of AES – which describes itself as “the largest US-based global power company”, generating and selling all kinds of energy to companies – said there is a lack of discussion about supply chains compared with ideological positioning on energy sources.
Instead he called for “more technical talk” about boosting battery storage to smooth out electricity supply and using existing infrastructure “smarter”. While new nuclear technologies such as small modular reactors are promising, it will be at least a decade before they can be deployed effectively, he noted.
In the meantime, with electricity demand rising rapidly, the politicisation of the debate around renewables as an energy source “makes no sense whatsoever”, he added.
The post Climate at Davos: Energy security in the geopolitical driving seat appeared first on Climate Home News.
Climate at Davos: Energy security in the geopolitical driving seat
Climate Change
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