Key highlights from April 2024 in the sustainability space.
1-EU Parliament approves CS3D
On the 24th of April, the EU Parliament finally adopted the Corporate Sustainability Due Diligence Directive after much reported controversy in February. The Council agreed on a new compromise in March 2024, dramatically reducing the scope of the CS3D by raising the threshold for the EU companies covered by the rules to those with more than 1000 employees, instead of the initial 500, and to those with a revenue greater than €450 million, up from €150 million.
While the watering down of the Directive is regrettable, it ensured the adoption of the directive while keeping its core intact, according to the Vice-President of the EU Parliament, Heidi Hautala. The timeline for the implementation of the Directive will start in 2027 for companies that have over 5,000 employees and a turnover of €1.5 billion, and will progressively apply to smaller companies in 2028 and 2029, giving them more time to prepare for implementation.
2-EU Parliament votes for withdrawal from the Energy Charter Treaty
On the same day where it approved the CS3D, the European Parliament voted to withdraw the European Union from the Energy Charter Treaty (ECT 1998). The treaty is often viewed as an obstacle to climate action as it allows conventional fossil fuel companies to make claims against states adopting clean energy transition policies. The UK had previously announced in February that they would be leaving the ECT. These decisions come following unsuccessful attempts at modernising the treaty in a way that accommodates the EU’s ambitious sustainability agenda through the EU Green Deal.
3-ECtHR rules on sufficiency of measures combating climate change
On April 9, the European Court of Human Rights issued rulings in three landmark climate change cases against France, Switzerland and Portugal (among others.) The Court was asked to determine whether the states’ allegedly insufficient measures to combat climate change amounted to a violation of the individual human rights of European citizens as guaranteed by the European Convention on Human Rights (ECHR). While the Court dismissed the cases against France and Portugal on procedural grounds, the case against Switzerland proceeded. In Verein Klimaseniorinnen Schweiz v. Switzerland, the Grand Chamber of the Court decided that Switzerland had not taken the necessary steps to fight global warming and had therefore violated the applicant’s (a Swiss NGO) right to private and family life under Article 8 of the Convention.
4-SBTi to accept use of carbon credits in relation to Scope 3 emissions
The Science Based Targets initiative (SBTi), an organisation focused on aligning corporate environmental sustainability action with the climate goals of the Paris Agreement, announced on April 9, that they were prepared to accept the use of environmental attribute certificates for the purpose of abatement of Scope 3 emissions. This announcement follows on from their announcement earlier this year that they plan to revise their Corporate Net Zero standard. They have explicitly stated that they will not attempt to validate the quality of carbon credits, instead establishing thresholds relating to the validity of such certificates.
Nevertheless, this announcement has the potential to significantly increase the global use of energy attribute certificates such as carbon credits. In response, SBTi employees have reportedly issued an open letter, accusing the SBTI board of trustees of “undermining our Standard Operating Procedures and governance processes” as the possibility of using carbon credits could dissuade companies from taking direct action to reduce emissions.
- Content prepared with the help of Defne Fresko Tasci.