France and Germany Urge Easing of ESG Regulations Amid Prospect of Trump’s Return

On January 22 (local time), Bloomberg reported that the European Union (EU) is under pressure to ease regulations aimed at strengthening corporate ESG (Environmental, Social, and Governance) responsibilities.

Reuters Yonhap News

원본보기 아이콘

According to Bloomberg, the French government plans to submit a proposal to the European Commission focused on reducing the regulatory scope of the Corporate Sustainability Reporting Directive (CSRD).

The CSRD is a regulation requiring large companies and listed small and medium-sized enterprises, including non-EU companies conducting economic activities within the bloc, to regularly report on their environmental and social impact activities. Under this directive, companies will be required to disclose reports in phases according to company size starting this year. According to current plans, approximately 50,000 companies will be subject to the regulation, and Korean companies operating in Europe are also expected to be affected.

However, even before the regulation is implemented, criticism that the EU economy is losing competitiveness and concerns that the burden on companies will increase have been consistently raised throughout the legislative process. A spokesperson for the French government commented on the CSRD, stating, "It should not impose significant costs on companies," and warned, "If the CSRD is implemented as it is, it will be a nightmare for businesses."

Prior to France, key German government ministers also sent a letter to the European Commission last month requesting a delay in the implementation of the CSRD. At the time, the ministers emphasized, "Our priority is to eliminate the excessive reporting burden imposed on companies," and stated, "The scope of CSRD reporting items, as well as the range of companies subject to the regulation, should be reduced."

Mario Draghi, former President of the European Central Bank (ECB) and former Prime Minister of Italy, also identified the CSRD and the EU's separate corporate regulation, the supply chain due diligence directive, as "the main sources of regulatory burden" in his advisory report on "The Future Competitiveness of the EU," commissioned by the European Commission and released in September last year.

Some observers predict that the Commission may opt to significantly narrow the scope of the CSRD, but a spokesperson for the European Commission stated, without further details, that discussions on the CSRD are expected to continue until February 26.

There is also analysis that the moves by the French and German governments-two pillars of the EU-to put the brakes on the CSRD are based on the reality the bloc could face if Donald Trump returns as President of the United States. President Trump has previously reversed climate policies from the Joe Biden administration, increased fossil fuel production, and signaled the imposition of tariffs on the EU and other allies in line with his "America First" policy.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.