Brussels: Europe and the Arabs
The Council of Member States and the European Parliament have reached provisional agreement on a directive on time limits for the adoption of sustainability reporting standards for certain sectors and for certain non-member state undertakings amending the Corporate Sustainability Reporting Directive (CSRD). According to a statement issued in Brussels, it will give companies more time to prepare for the European Sectoral Standards for Sustainability Reporting (ESRS) and specific standards for large companies from outside the European Union, which will be adopted in June 2026, two years later than originally scheduled.
“Enhancing European competitiveness is a fundamental pillar of the Belgian presidency, and one way to achieve this goal is to reduce the administrative burden on companies,” said Vincent van Petegem, Belgian Deputy Prime Minister and Minister of Finance, whose country holds the current rotating presidency of the Union. “Today’s agreement sets reporting requirements to a minimum.” It gives companies time to implement European standards for sustainability reporting and prepare for sectoral European standards for sustainability reporting.
According to a proposal put forward by the Commission in this regard, European Union law requires that listed companies disclose information about risks and opportunities arising from social and environmental issues to help investors, civil society, consumers and other stakeholders assess the green and social sustainability of their activities. On July 31, 2023, the Authority adopted the first comprehensive criteria and standards for all sustainability topics to facilitate reporting. They must be followed by sector-specific standards, standards for SMEs, and standards for third-country companies with a turnover of €150 million in the EU and which have at least one branch or subsidiary in the EU. All of these new standards are scheduled for June 30, 2024.
The guidance agreed by participating legislators postpones the adoption of the new standards to June 30, 2026. This will allow companies to focus on implementing the first set of ESRS. It will also allow more time to develop sector-specific sustainability standards as well as standards for specific companies from third countries. The filing date for third country companies will remain fiscal year 2028, as stipulated in the CSRD.
Main elements of the agreement
The Interim Agreement supports the objectives of the Committee's proposal but modifies the legal nature of the text (from Committee decision to guidance) to respect the legal basis of the proposal. It is also proposed that the Commission publish eight sector-specific reporting standards once they are ready before the new deadline of 30 June 2026. Member States will not need to alter this Directive, as the targeted amendments relate to enabling the adoption of delegated acts granted. To the committee.
Now the interim agreement reached with the European Parliament needs to be ratified and formally adopted by the two institutions.
In its Communication on “Long-term competitiveness of the EU: looking beyond 2030”, the Commission identifies reporting as one of the key burdens for businesses in general and SMEs in particular. It was therefore proposed to reduce reporting obligations by 25% without undermining the relevant policy objectives.
On 17 October 2023, the Commission tabled its proposal to postpone the deadlines for the adoption of sector-specific ESRS and ESRS standards for some non-EU companies by two years to allow more time to implement the first batch of standards and prepare for the next ones.
This proposal is part of the first package of measures to streamline reporting requirements and is consistent with the SME relief package.,