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Comments come as German justice minister says he wants the rules renegotiated

The European Commission is urging companies not to “over-implement” its new sustainability disclosure rules, as it tries to stem a new wave of pushback.

Tom Dodd, a team leader within the Commission’s sustainability reporting unit, insisted on Monday that the Corporate Sustainability Reporting Directive (CSRD) should be applied in a “proportionate” and “pragmatic” way, and that “many of the uncertainties or apparent ambiguities will probably resolve themselves through market practice”.

The comments were made during a panel at Reuters’ Sustainability Europe conference in London this week, and came just days after Germany’s Justice Minister, Marco Buschmann, called for the law to be rewritten.

Speaking at an event hosted by the German Chamber for Industry and Commerce on September 27, Buschman reportedly said he wanted to “use the period until full CSRD implementation to renegotiate”.

According to Euractiv, Christian Petry from Germany’s leading coalition-government party, SPD, said Buschmann’s calls for renegotiation should be viewed as an “early campaign move” from the FDP party, rather than a government-wide position.

Last week, infringement proceedings began against 17 Member States – including Germany - after they failed to adopt the CSRD into national law by the EU's July deadline.

Letters were sent to Belgium, Spain, the Netherlands, Austria and others, in which the Commission claimed that not transposing the rules in time made it impossible for investors to properly account for sustainability when making decisions.

The incoming Commission is under mounting pressure to pare back sustainability reporting requirements, to ensure EU companies don’t end up at a competitive disadvantage to those headquartered elsewhere in the world.  

In relation to CSRD, policymakers still need to produce reporting standards for listed SMEs and non-EU companies doing significant business within the bloc. They are also expected to develop sector-specific standards and voluntary guidelines for unlisted SMEs seeking to provide information to banks and larger clients captured by Directive.

Speaking on Monday, Dodd said that, given the changing sentiment at the top levels of the Commission, “we will have to sit down and listen to our incoming political bosses and work out exactly how they want us to move ahead and implement all of this”.

In the meantime, he told companies and supervisors to “use some common sense”.

“Our single most important message at the moment is: let's make sure that we implement these standards in a proportionate and in a pragmatic way.”

“Let's not fall into the trap of trying to over-implement. European rules do not require reporting to the nth degree of granularity – they require companies to make certain decisions about what is relevant to report.”

The European Commission is hosting a seminar in Brussels on November 15^th to help companies understand how to apply the standards that underpin CSRD, known as the ESRS.