Business lobbying hollows out new EU proposal for social and environmental company reporting

New report highlights role of Germany in supporting corporate lobbying offensive

The proposal would only affect a 0,3 per cent of all European firms

The European Commission's new proposal for company reporting on non-financial issues has been severely weakened by industry lobbying, a new report by Corporate Europe Observatory (CEO) shows. While the Commission originally considered requiring companies to publish data on their social and environmental impact, the proposal presented yesterday takes a voluntary approach with no means of enforcement. The proposal would only apply to a mere 0.3% of all European firms - and even those covered have ample opportunity to escape scrutiny.

CEO’s report “Refusing to be accountable” shows that lobbying was led by German industry , with very active support from Angela Merkel's conservative-liberal government. Internal documents released to CEO under freedom of information (FOI) rules show that the German government blocked anything but the voluntary approach and successfully stretched the definition of 'small and medium businesses' , which are fully exempted in the Commission's proposal, in order to protect its own industrial interests.

Subcontractors have also been exempted, despite repeated demands by civil society groups to ensure mandatory reporting on the full supply chain as a necessary first step for citizens to scrutinise corporate behaviour.

"Industry lobbies, supported by the German government, have been pulling the teeth out of the proposal one by one, to the extent that it is now virtually meaningless", said Kim Bizzarri, the author of the report. "The strategy has been to exempt as many firms as possible and give the rest completely free hands in what they choose to disclose or keep secret".

However, the proposal will now be discussed in the European Parliament, where MEPs still have the opportunity to strengthen rules on non-financial reporting.

"Even the modest reporting obligations initially considered by the Commission - a far cry from binding standards for corporate behaviour - have been sacrificed to satisfy industry interest. It is now up to MEPs to stand up for the public interest and patch the many loopholes that make the Commission proposal more or less useless as a tool for corporate accountability", said Olivier Hoedeman, research and campaign coordinator at Corporate Europe Observatory.