Tuesday saw 22 votes in favor and one against for the Legal Affairs Committee’s position on the Corporate Sustainability Reporting Directive. The bill will increase accountability for businesses’ impact on the planet and people if it is agreed to by EU governments. Investors and the public will have access to comparable, reliable, and easily available information on sustainability.
EU sustainability standards
The text clarifies reporting rules and introduces more detailed reporting requirements to the revamped. Non-Financial Reporting DirectiveIn accordance with the European Green Deal. MEPs agreed that information should be audited and made more accessible, reliable, and comparable.
The European Financial Reporting Advisory Group (EFRAG) would be tasked with developing the mandatory EU sustainability-reporting standards, covering environmental matters, social affairs, including gender equality and diversity, and governance, including anti-corruption and bribery, which the Commission would then adopt by Delegated acts. To achieve this, EFRAGs funding must be increased and annual talks held with Parliament.
Scope, high-risk sectors
All large companies should be covered by the new CSRD rules (as described in the Accounting directiveMEPs approved the inclusion of listed companies. They also voted for non-EU companies to be included in the internal market. MEPs believe small and medium-sized businesses should be able comply with reporting standards on a voluntary basis.
The text also requests that the Commission establish additional reporting criteria for companies involved in high-risk industries (textiles, agriculture, mining, and minerals). MEP also proposes that companies are given an additional year to adjust to the new rules. The first public reports will be due in 2025.
Quote
Pascal Durand, Renew, FR, was the rapporteur. He said: Long awaited and eagerly awaited by business leaders and investment professionals, the Corporate Sustainability Reporting Directives (CSRD) are a further step in our evolution of our business model, and investment practices. The EU will be well equipped to protect our legal, competitive and environmental values. It will also be able negotiate at international levels to ensure that they are not lost or absorbed into lower-standard global systems.
Next steps
The Council approved its General approach24 February 2022 Once the Parliament approves its negotiating positions, negotiations can begin with member countries.
Background
Investors and other stakeholders are not provided with sufficient information by companies. It can be difficult to compare data reported by different companies. Investors need to be informed about the environmental and human impacts of companies to satisfy their own disclosure requirements. Such information allows money to be channelled towards environmentally-friendly activities. A public accountability gap is also created by poor reporting.
