Approval of Corporate Sustainability Reporting Directive

At last we can say that the plenary of the European Parliament has approved by a large majority (525 votes in favour, 60 against and 28 abstentions) the text of the proposed Directive on sustainability reporting, and the Council is expected to adopt the proposal on 28 November, after which it will be signed and published in the Official Journal of the European Union, coming into force twenty days later and the rules will start to apply between 2024 and 2028. The aim of the Directive is to bring sustainability reporting in line with financial reporting over time, so the new legislation aims to fill gaps in the existing rules on non-financial reporting, which are considered insufficient and unreliable. To this end, it introduces more detailed obligations on the environmental, human rights and social impacts of companies, based on common criteria in line with the EU’s climate objectives.

The Commission will adopt the first standards in June 2023. To ensure that companies provide reliable information, they will be subject to independent audits and certification processes. Financial and sustainability reporting will be placed on an equal footing and investors will be provided with comparable and reliable data. Digital access to sustainability information is also ensured.

Next steps at European level:

• 1 January 2024 for large public interest companies (more than 500 employees) already subject to the non-financial reporting directive, which will be required to report in 2025.
• 1 January 2025 for large companies not subject to the non-financial reporting directive (more than 250 employees and/or a turnover of EUR 40 million and/or EUR 20 million in total assets), which will be required to report in 2026.
• 1 January 2026 for listed SMEs and other companies, which will have to report in 2027. SMEs will be able to delay until 2028.

This is all part of the EU’s commitment to respect human rights and reduce its impact on the planet.