CSRD/ESRS: latest resolutions and updates

Several suggestions and decisions have been made around CSRD in the last week more specifically on the related ESRS reporting standards.

The CSRD, scheduled to take effect at the start of 2024, represents a substantial revision of the 2014 Non-Financial Reporting Directive (NFRD), which currently serves as the sustainability reporting framework in the European Union. These new regulations will notably broaden the scope, compelling over 50,000 companies to furnish sustainability disclosures, as opposed to the current 12,000. Additionally, the CSRD will introduce more comprehensive reporting criteria pertaining to a company’s environmental impact, observance of human rights and social standards, and sustainability-related risks.

The European Sustainability Reporting Standards (ESRS), define the regulations and criteria for businesses to report on factors related to sustainability, such as impacts, opportunities, and risks. This reporting is in line with the forthcoming Corporate Sustainable Reporting Directive (CSRD) within the European Union.

The final ESRS Standards were officially signed off in July 31, 2023.

But now there have been renewed discussions:

1. On October 12, over 40 members of the European Parliament submitted a motion for a resolution, urging the rejection of the recently approved European Sustainability Reporting Standards (ESRS). Instead, they proposed to introduce simpler and less comprehensive rules for corporate sustainability reporting.
2. On October 18, the European Parliament conducted a vote on the above-mentioned motion to decline the proposed European Sustainability Reporting Standards (ESRS). The resolution for rejection did not secure a majority vote, as Members of the European Parliament (MEPs) favored the private sector’s active involvement in the pursuit of a sustainable and equitable economy. The ESRS is scheduled to take effect before the year’s end, requiring large corporations to begin disclosing the sustainability of their operations according to ESRS criteria commencing in early 2024.
3. On October 17, the Commission’s strategy for long-term competitiveness outlined an objective to reduce the administrative burdens related to reporting requirements by 25%, all while ensuring that the fundamental policy objectives of the relevant initiatives are not compromised.
   Some instances of the simplification suggestions involve extending the timeline for the approval of industry-specific European sustainability reporting standards. (2024 Commission work programme (europa.eu)).
   The European Commission will report on the progress achieved towards the 25% reduction goal in the annual burden surveys, starting with the 2023 edition which will be published next year.

The parliamentary motion to generally simplify the European Sustainability Reporting Standards (ESRS) was rejected. The first set of ESRS will enter into force as planned in January 2024 for the largest EU companies, who will disclose their first CSRD reports in 2025. However, it is still possible that some industry-specific standards will be introduced later.

Our Regulatory Watch team continues to monitor developments around the CSRD and ESRS. We will alert you as soon as there is any news or need for action.

If you have any questions about sustainability reporting or our automated solutions, please contact us.