| The Council and the European Parliament on February 7 2024 reached a provisional deal on a directive on the time limits for the adoption of sustainability reporting standards for certain sectors and for certain third-country undertakings amending the Corporate Sustainability Reporting Directive (CSRD). Today’s agreement will give more time for companies to prepare for the sectorial European Sustainability Reporting Standards (ESRS) and for specific standards for large non-EU companies, which will be adopted in June 2026, two years later than the originally scheduled date.
“Boosting European competitiveness is a core pillar of the Belgian Presidency, and one way to achieve this objective is to reduce the administrative burden on companies. Today’s agreement limits reporting requirements to the minimum and gives companies time to implement the ESRS and prepare for the sectorial European Sustainability Reporting Standards.” Commission proposal EU law requires that listed companies should disclose information about the risks and opportunities arising from social and environmental issues to help investors, civil society, consumers and other stakeholders to evaluate the green and social sustainability of their activities. On 31 July 2023, the Commission adopted the first cross-cutting standards and standards for all sustainability topics to facilitate this reporting. These must be followed by sector-specific standards, standards for SMEs and standards for third country companies with a €150 million turnover in the EU and which have at least one subsidiary or branch in the EU. All these new standards were scheduled for 30 June 2024. The directive agreed today by the co-legislators postpones the adoption of the new standards to 30 June 2026. This will allow companies to focus on the implementation of the first set of ESRS. It will also allow more time to develop sector-specific sustainability standards as well as standards for specific third-country companies. The date of application for third country companies will remain the financial year 2028, as set out in the CSRD. Main elements of the agreement The provisional agreement supports the objectives of the Commission’s proposal but modifies the legal nature of the text (from a Commission decision to a directive) to respect the legal basis of the proposal. It also suggests that the Commission publishes eight sector-specific reporting standards as soon as they are ready before the new deadline on 30 June 2026. Member states will not need to transpose this directive, since the targeted amendments concern the empowerment to adopt delegated acts granted to the Commission. Next steps The provisional agreement reached with the European Parliament now needs to be endorsed and formally adopted by both institutions. Background In its communication ‘Long-term competitiveness of the EU: looking beyond 2030’, the Commission identified reporting as one of the main burdens for companies in general and for SMEs in particular. It therefore proposed reducing reporting obligations by 25% without undermining related policy objectives. |