EU: Recommendation on Voluntary Sustainability Reporting for SMEs
In July, the European Commission adopted a recommendation on voluntary sustainability reporting for small and medium-sized enterprises (SMEs). The recommendation presents a voluntary standard that will make it easier for SMEs that are not covered by the Corporate Sustainability Reporting Directive (CSRD) to respond to specific requests for sustainability information from large financial institutions and companies.
To the extent possible, the Commission encourages large companies and financial institutions that seek sustainability information from SMEs to base their requests on the voluntary standard. SMEs may also wish to voluntarily report sustainability information to improve their access to sustainable finance and better understand and monitor their own sustainability performance, thereby improving their resilience and competitiveness.
As background, in February the Commission adopted the “Omnibus I” simplification package, which proposes to limit mandatory sustainability reporting under the CSRD to large companies with more than 1,000 employees. For companies with up to 1,000 employees, the Commission proposes a voluntary reporting standard. This voluntary standard will also act as a “value-chain cap” to protect SMEs and other companies not subject to mandatory reporting under the CSRD from excessive information requests from their value chain partners.
The timing of the formal adoption of the voluntary standard will depend on the pace and conclusion of negotiations between the co-legislators on the Omnibus I proposal. The content of the final draft may vary with respect to the recommendation.
EU: Updated Proposal to Restrict PFAS
The European Chemicals Agency (ECHA) has published an updated proposal to restrict per- and polyfluoroalkyl substances (PFAS) under the EU’s chemicals regulation (REACH). The update was prepared by authorities from Denmark, Germany, the Netherlands, Norway, and Sweden, who submitted the initial proposal in January 2023.
PFASs are a group of thousands of almost exclusively man-made substances that are used in numerous applications, including food packaging. Concerns about PFAS mainly come from their environmental persistence and potential health effects.
The publication of the updated proposal comes after an assessment of more than 5,600 scientific and technical comments received from third parties during a 2023 consultation. The proposal concludes that a broad restriction is preferable to authorization as it is the most effective and efficient way to manage such a large and complex group of substances used in numerous applications. It further notes that a restriction can cover imported articles.
ECHA aims to complete its scientific evaluation of the proposed EU-wide restriction on PFAS by the end of 2026. The European Commission will ultimately decide on the restriction in consultation with the EU member states.
EU: 50% Pesticide Reduction Target Reached Ahead of Schedule
In 2020, the European Commission announced two non-legally binding pesticide reduction targets: a 50% reduction in the use and risk of chemical pesticides, and a 50% reduction in the use of more hazardous pesticides (the so-called “candidates for substitution”). According to the most recent annual progress report published by the Commission, the first of these targets has already been achieved.
Specifically, with respect to the baseline period of 2015-2017, the new data show that by 2023 there had been a 58% decrease in the overall use and risk of chemical pesticides. For the most hazardous pesticides, a 27% decrease was achieved by 2023, with the trend line suggesting that the EU is on track to reach the 50% target by 2030.
Alongside the EU-wide figures, the Commission also published progress updates on each member state.
EU: Commission Guidance on Deforestation Regulation
The European Commission has published a notice providing clarifications and guidance on certain aspects of Regulation (EU) 2023/1115 on Deforestation-Free Products (EUDR).
In particular, the notice clarifies the circumstances under which packing does not fall under the scope of the EUDR:
- Packing material classified under HS code 4819 (“Cartons, boxes, cases, bags and other packing containers, of paper, paperboard, cellulose wadding or webs of cellulose fibres; box files, letter trays, and similar articles, of paper or paperboard of a kind used in offices, shops or the like”) is not covered by the EUDR when is used to “support, protect or carry” another product.
- Articles under HS code 4415 (“Packing cases, boxes, crates, drums and similar packings, of wood; cable-drums of wood; pallets, box pallets and other load boards, of wood; pallet collars of wood”) are not covered by EUDR when they are used exclusively as packing material to support, protect or carry another product placed on the market.
- Both of the aforementioned categories of goods are covered by the EUDR when they are placed on the market or exported as products in their own right, rather than as packing for another product.
In addition, the notice clarifies the role of certifications and third-party verification schemes, noting that “while such schemes can be used in the risk assessment procedure under Article 10, they cannot substitute the operator’s responsibility as regards due diligence further to Article 8. This means that the use of such schemes does not imply a ‘green lane,’ since the operator is still required to exercise due diligence and is held liable if it fails to comply with the due diligence requirements of the EUDR.”
USA: Expedited Disaster Assistance for Farmers
The U.S. Department of Agriculture announced in July that agricultural producers who suffered eligible crop losses due to natural disasters in 2023 and 2024 could apply for US$16 billion in assistance through the Supplemental Disaster Relief Program (SDRP).
To expedite the implementation of SDRP, the USDA’s Farm Service Agency (FSA) is delivering assistance in two stages. This first stage is open to producers with eligible crop losses that received assistance under crop insurance or the Noninsured Crop Disaster Assistance Program during 2023 and 2024. Stage One signups started in person at FSA county offices on July 10 and prefilled applications were mailed to producers on July 9. Stage Two signups for eligible shallow or uncovered losses will begin in early fall.