European Parliament and Council lawmakers announced today that they have reached provisional agreement on a directive to delay the adoption of standards for companies to provide sector-specific sustainability disclosures and for sustainability reporting by companies outside the EU under the EU Directive. Corporate Sustainability Reports (CRSD).
While the agreement, which aims to provide more time for companies to prepare for increased reporting requirements, and for the European Financial Reporting Advisory Group (EFRAG) to develop the new standards, agrees with the proposed delay, it also requires that the new industry standards to be published as soon as they are ready, before the new 2026 deadline.
The postponement was initially proposed by the EU Commission in October as part of its Commission Work Program for 2024, which included reducing communication burdens for businesses as one of its priorities, and highlighted the postponement of the deadline for adopting Sector-specific European Sustainability Reports. Standards (ESRS) as one of the top listed stocks.
The ESRS sets out the rules and requirements for companies to report sustainability-related impacts, opportunities and risks under the EU CSRD, which began to be applied from the beginning of 2024.
The first set of ESRS rules, which were adopted by the Commission in July 2023, established sector-independent sustainability reporting requirements, while the CSRD subsequently required the adoption of sector-specific ESRS by the end of June 2024, describing information from sustainability for companies to present reports relating to the sectors in which they operate.
The CSRD also included a requirement for large third-country companies operating in the EU to provide sustainability reporting, with the adoption of ESRS rules applicable to these companies also initially expected by the end of June 2024, and with requirements for reporting starting in 2028.
The Commission recommended delaying the adoption of these standards for 2 years in order to allow companies to focus on implementing the first set of ESRS and limit reporting requirements, as well as to provide more time for the European Information Advisory Group Financial (EFRAG). to develop new standards.
The agreement marks one of the last major steps towards approval of the directive to delay the adoption of standards, with the agreement now requiring formal adoption by the Council and the EU Parliament.
Following the agreement, Vincent Van Peteghem, Belgian Deputy Prime Minister and Minister of Finance, said:
“Today’s agreement limits reporting requirements to a minimum and gives companies time to implement the ESRS and prepare for sector-wide European Sustainability Reporting Standards.”
