The revised rules are the quality, consistency, and quality of sustainability information disclosed by businesses under existing EU law, as evidenced by research published by the Alliance for Corporate Transparency. Addresses key comparability issues.
CSRD clarifies transparency obligations regarding sustainability impacts, risks and opportunities (including decarbonization plans and performance) for large enterprises operating in the EU and develops mandatory ESG enterprise sustainability reporting standards And are obliged to hire.
This reform is the foundation for ensuring the success of the European Sustainable Financial Agenda, the EU Green Deal, and the REPower EU program. Relevant and comparable data are prerequisites for guiding sustainable financial flows that support the transition to an EU net-zero economy. .. It also monitors progress for financial market participants to fulfill their obligations and achieve EU goals and commitments on climate, biodiversity and human rights, fossil fuels and thus Russia (which we need). It is also essential to reduce the EU’s dependence on). Data on corporate energy consumption and production, renewable energy production, etc.).
Five important changes and missed opportunities:
- The scope of the law has been extended to all listed and unlisted companies with more than 250 employees. The EU Commission estimates that this includes about 50,000 companies, excluding more than 99% of companies in the EU. Listed SMEs were included in the initial proposal to report in a mandatory manner as of 2026 according to simplified standards (recommended by multiple studies and studies, including those of the EU Commission). increase). In the final text, you can opt out until 2028. This has a significant impact on SMEs’ readiness to take advantage of sustainable funding flows and bank relationships, public procurement opportunities, or demands from business partners. The European Parliament, investors, civil society and academic research have recommended an approach that defines high-risk sectors and expands their reach to SMEs in those industries.
- The reporting obligations of a company are specified for the following disclosures:
- A transition plan to reach climate neutrality by 2050. This includes actions, investment plans, and exposure to fossil fuels.
- Time-limited targets (including GHG emission reduction targets) related to sustainability issues and the company’s progress in achieving them.
- Sustainability due diligence information, that is, the transparency of processes and adverse effects identified in the enterprise value chain, and the measures taken to address such impacts.
- A key indicator of CSRD is the development and adoption of mandatory ESG standards based on dual importance (that is, the impact that a company has on the planet and people, and the risks and opportunities to a company that arise from sustainability issues. Disclosure).
- Following CSRD guidance, this includes quantitative and qualitative data, both retrospective and forward-looking information.
- Draft EU standards (sector-agnostic) have been published and public consultation is available until August. These are designed by a group of stakeholder experts to be viable, flexible and implementable by the enterprise. A group of experts who are part of EFRAG’s new Sustainability Reporting Pillar will continue to make technical proposals on sector-specific standards.
- Regarding the timeline, by the agreement of the co-members, until 2024 for companies subject to the existing law (EU Non-Financial Reporting Directive), other large listed and unlisted companies (250 people). For the above employees), it is proposed to postpone the application until 2025. )). The first proposal was set to be integrated into national law by the end of 2023, but the transaction now includes a transpose period of 18 months. It is imperative that Member States provide clarity to the enterprise by making the necessary changes by January 2024.
- The implementation of the directive and the evaluation of the adoption of standards by SMEs have been requested by the European Commission by 2028, but voluntary measures have proven ineffective for companies in the highly polluted sector. It’s too late, considering that most aren’t. It is subject to CSRD.
The Alliance for Corporate Transparency’s organization welcomed the above developments and regrets missing the opportunity, in line with the NGO’s policy recommendations.
Susanna Arus, Communications and EU Public Relations Manager at Frank Bold, said:
“Member States will provide clarity to companies by making the necessary changes to national law by January 2024, not only for all large companies (not just those already covered by the EU Non-Financial Reporting Directive). ) Is needed and the fiscal year 2024. Phased implementation risks creating two speeds of Europe that put countries and companies at a disadvantage in accessing sustainable flow of funds. . “
Giorgia Ranzato, T & E’s Sustainable Finance Officer, member of the EFRAG Expert Group, and member of the Platform for Sustainable Finance, said:
“Despite the exclusion of SMEs and the delay in entry into force, today’s agreement has established the EU as a global leader in sustainability reporting, but the devil is in the details. Specific disclosure requirements have not yet been defined. We have seen it in taxonomy rules: ambitious Level 1 legislation, and weak criteria that invalidate all work. Hopefully the Commission and Council. Will not spoil this file. “
Mirjam Wolfrum, Director of Policy Engagement at CDP Europe, said:
“CSRD is a breakthrough in bold corporate disclosure rules that drive companies to set emission and natural goals in line with science. Companies disclosing through CDP are well prepared for new requirements. We have always evolved and adapted our questionnaires to new standards, priorities and regulations, and we will continue to do so. “
In response to this agreement, Elisa Peter, Director of Publish What You Say, said:
“We welcome the legislature’s attention to the high-risk sector. Without full transparency to oil, gas and mining companies’ mining projects, a fair transition would not be possible yesterday. The sustainability disclosure rules currently being developed to carry out transactions are critical to the people, climate, environment and good governance of the countries where oil, gas and minerals are extracted. “
Regarding the outcome of the CSRD Trilogue Meeting, Isabella Ritter, EU Policy Officer for Share Action, commented:
“The introduction of mandatory and EU-wide sustainability reporting standards will ultimately provide investors with comparable and qualitative sustainability data to better consider the impact of their investments. Standards covering the entire ESG spectrum and following a double materiality approach will enable investors to re-direct their capital flows towards more sustainable activities, especially transition plans that include GHG emission reduction targets. The company’s disclosure of information provides investors with the long-awaited information about the investee’s ambitions for climate change. “
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