EU Council approves corporate sustainability reporting directive

The Council of the European Union has given its final approval to the corporate sustainability reporting directive (CSRD). This follows the adoption of the CSRD by the plenary of the European Parliament on 10 November, with 525 votes in favour, 60 votes against and 28 abstentions.

Companies inside and outside of the EU will soon be required to publish detailed information on sustainability matters, namely how their business model affects their sustainability, and on how external sustainability factors (such as climate change or human right issues) influence their activities.

The new sustainability reporting rules will apply to:

·From 1 January 2024 (with reports due in 2025) for large public-interest companies (with over 500 employees) already subject to the non-financial reporting directive;

·From 1 January 2025 (with reports due in 2026) for large companies that are not presently subject to the non-financial reporting directive (with more than 250 employees and/or €40 million in turnover and/or €20 million in total assets);

·From 1 January 2026 (with reports due in 2027) for listed SMEs and other undertakings. SMEs can opt-out until 2028;

·From 1 January 2028 (with reports due in 2029) for Non-European companies generating a net turnover of EUR 150 million in the EU and which have at least one subsidiary or branch in the EU. These companies must provide a report on their environmental, social and governance (ESG) impacts, as defined in the directive.

The European Financial Reporting Advisory Group (EFRAG) will be responsible for developing European standards (e.g. on reporting standards relating to specific sectors such as food, agriculture etc.) following technical advice from a number of European agencies.

Following the Council’s approval today of the European Parliament's position, the legislative act was adopted.

After being signed by the President of the European Parliament and the President of the Council, it will be published in the Official Journal of the European Union and will enter into force 20 days afterwards. The new rules will need to be implemented by member states 18 months later.

More information: https://www.consilium.europa.eu/media/60306/st10835-xx22.pdf

Contact: Lebo Mofolo, lmofolo@frucom.eu