This week the European Union (EU) members delayed sustainability reporting for two years for non-EU companies operating in the EU, and for companies operating in certain industry sectors. The final implementation of the Corporate Sustainability Reporting Directive (CSRD) for these companies will be postponed until June 30, 2026.
The delay will allow for the development of sector-specific sustainability standards and to allow firms to focus more on the implementation of the first set of European Sustainability Reporting Standard (ESRS).
EU-based companies not afforded this delay will still need to comply with the CSRD according to the established timeline, which is determined by factors such as company size and prior Non-Financial Reporting Directive (NFRD) reporting status.
The CSRD is an EU regulation adopted in November 2022 that requires public and private companies operating in the EU to include in their annual reports information concerning the social and environmental performance of activities across their value chains. The detailed process used by firms to report under the CSRD is called the (ESRS).
The European Financial Reporting Advisory Group drafted the ESRS to ensure it sufficiently covers all sustainability-related impacts, opportunities and risks.
The legislation applies to a range of companies, including small, medium and large enterprises operating in the UK. Initially, it applies to publicly traded and large private companies and will expand over time to cover more medium-sized (and some small) businesses.
Non-compliance may result in various actions that are determined by EU member states and can include fines, public denunciation, and additional requirements for third-party assurance.
Read more in Forbes, ESG Today, and Legal Dive.
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[Image credit: CC-BY-4.0: © European Union 2020 – Source: EP]