EU Lawmakers Approve 2-Year Delay in Corporate Sustainability Reporting Standards

EU Lawmakers Approve 2-Year Delay in Corporate Sustainability Reporting Standards

The European Parliament's Legal Affairs Committee voted 21-2 to approve a proposal for a two-year delay in key aspects of the Corporate Sustainable Reporting Directive (CSRD). The delay includes the adoption of sector-specific sustainability disclosures and sustainability reporting standards for companies outside the EU. The move is part of the EU Commission's effort to reduce reporting burdens for companies, as outlined in its 2024 Commission Work Programme.

The CSRD, which came into effect at the beginning of 2024, mandated companies to report on sustainability-related impacts, opportunities, and risks. The European Sustainability Reporting Standards (ESRS) were introduced to set rules and requirements for such reporting. The initial ESRS rules, adopted in July 2023, were sector-agnostic, with the CSRD subsequently requiring the adoption of sector-specific ESRS by the end of June 2024.

The EU Commission proposed the delay in October, citing the need to ease the implementation burden on companies focusing on the initial ESRS set. The postponement covers the adoption of sector-specific ESRS and extends to large non-EU companies operating in the EU, requiring them to provide sustainability reporting. The initial deadline for these standards was set for the end of June 2024, with reporting requirements beginning in 2028.

MEPs' Position and Recommendations

While endorsing the proposal, Members of the European Parliament (MEPs) emphasized the importance of timely publication of the standards as soon as they are ready before the new deadline. They further urged the Commission to consult Parliament annually on the progress toward developing these standards.

Following the committee's vote, the proposal is set to move for approval by the Parliament plenary, shaping its negotiating position with the EU Council. Rapporteur Axel Voss underscored the need for the delay, stating, "We will delay the deadline for sector-specific standards under the Corporate Sustainability Reporting Directive (CSRD) by two years to give EFRAG the time to develop quality standards and give companies the time to put them into practice."

The decision reflects a balance between the commitment to sustainability reporting and the recognition of practical challenges faced by businesses, aligning with broader efforts to support companies in navigating complexities during challenging times, including the COVID-19 pandemic and economic uncertainties.

The GRC Report is the first word in governance, risk, and compliance news. As your trusted source for comprehensive coverage, the GRC Report keeps you informed and equipped to navigate the evolving landscape of governance, risk, and compliance. And remember, the GRC Report isn't just a news source; it's a community of professionals who share your passion for GRC excellence. Don't miss out on our insightful articles and breaking news – join the conversation and empower your GRC journey.