EP Committee Adopts Position on Sustainability Reporting Directive
The Legal Affairs Committee of European Parliament (EP) adopted its position on the Corporate Sustainability Reporting Directive (CSRD), which will complement the European sustainable finance strategy.
Under this Directive, large companies will soon need to publicly disclose detailed information on the way they operate and manage social and environmental risks. The Members of the European Parliament agreed that disclosed information should be audited, more easily accessible, reliable, and comparable. The European Commission had, in April 2021, adopted a proposal for Corporate Sustainability Reporting Directive (CSRD), which amends the existing reporting requirements of the Non-Financial Reporting Directive and
- extends the scope to all large companies and all companies listed on regulated markets (except listed micro-enterprises)
- requires the audit (assurance) of reported information
- introduces more detailed reporting requirements as well as a requirement to report according to mandatory European Union (EU) sustainability reporting standards
- requires companies to digitally "tag" the reported information, so it is machine readable and feeds into the European single access point
Members of the European Parliament agreed that the new CSRD rules should cover all large companies, whether listed or not. Members of the European Parliament also voted to include non-EU companies operating in the internal market. At this stage, Members of the European Parliament believe that small and medium-size undertakings should be able to adhere to reporting standards voluntarily. Members of the European Parliament also propose to give companies with relevant activities in high-risk sectors (textile, agriculture, mining, minerals) an additional year to adapt to the new rules, with the first public reports due in 2025. The proposal for CSRD envisages the adoption of EU sustainability reporting standards. The first set of standards would be adopted by October 2022. 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 European Commission would then adopt by delegated acts. To achieve this, Members of the European Parliament urged that EFRAG’s funding should be increased and annual discussions to be held with the Parliament. As a next step, talks with member states will start once the Parliament as a whole approves its negotiating position.
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Keywords: Europe, EU, Banking, CSRD, NFRD, Reporting, Sustainable Finance, ESG, Climate Change Risk, Disclosures, EFRAG, European Parliament, EC, Subheadline
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