EU sustainability regulations: one step forward, two steps back?

On 3 April 2025, the European Parliament overwhelmingly voted to delay the implementation of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

The regulations are seen by many as setting the global benchmark for sustainability by requiring businesses to maintain, manage and report on climate risk in their operations and supply chain. Their effect on adoption will be far-reaching, applying not only to businesses situated in the EU, but also those trading in the region.

The European Parliament has agreed to extend adoption timescales by an additional two years (with reporting for large enterprises moving back to 2028 and for SMEs to 2029) and has also reduced the number of businesses that will fall within scope. The rationale for the move is to reduce compliance costs for EU businesses, but its been condemned by many putting short term gain ahead of long term sustainability and led 8 NGOs to lodge formal complains deriding the decision as untransparent and undemocratic.

The NGOs’ concerns do seem justified when set in the context of recent publications here in the UK. The First Sentier MUFG Sustainable Investment Institute recently reported that the estimated 2.5° increase in global temperatures by 2050 could cause $38 trillion in damages and reduce agricultural yields by up to 2050. If you factor in the current rate of population growth, they concluded that demand would outstrip supply in almost every region of the world over this same timescale.

This concern isn’t limited to the world of academia. In an open letter published on 3 April 2025 and purporting to represent industry professionals from more than half the UK’s grocery market (including producers, manufacturers and retailers), they warned that food security in the UK was inadequate to face the challenge of supply risks and called on all stakeholders to drive industry change by demanding businesses:

• provide credible evidence that their sourcing regions and key commodities will be stable over the next 10 years;
• work with policy makers to meaningfully address nature related risks; and
• to formulate realistic alternative plans to deal with the reduction in global production and increased market competition.

Whether an ethical investor, an interested consumer or a cash strapped business, there is now universal acceptance that nature related risks (including extreme weather, soil degradation, reduced biodiversity and pollinators) have a direct link to food security, cost and supply chain resilience. Tackling that together would give businesses a competitive advantage, reduce consumer costs and be a win for the planet. That’s a pretty compelling story and one the European Parliament might have paid more attention to before kicking the proverbial tyre down the road for another two years…