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The European Parliament announced the approval by MEPs on the Legal Affairs Committee by a 21-2 vote of a proposal to delay key aspects of the Corporate Sustainable Reporting Directive (CSRD) by 2 years, including the adoption of standards for companies to provide sector-specific sustainability disclosures and for sustainability reporting from companies outside of the EU.
The proposal was made by the EU Commission in October, as part of its 2024 Commission Work Programme, which included reducing reporting burdens for companies as one of its priorities, and highlighted the postponement of the deadline for the adoption of sector-specific European Sustainability Reporting Standards (ESRS) as one of the key actions listed.
The ESRS sets out the rules and requirements for companies to report on sustainability-related impacts, opportunities and risks under the EU’s CSRD, which began applying from the beginning of 2024.
The first set of ESRS rules, which were adopted by commission in July 2023, set out sector-agnostic sustainability reporting requirements, while the CSRD subsequently required the adoption of sector-specific ESRS by the end of June 2024, outlining sustainability information for companies to report relating to the industries in which they operate.
The CSRD also included a requirement for large non-EU companies that operate in the EU to provide sustainability reporting, with ESRS adoption of rules applying to these businesses also initially scheduled for the end of June 2024, and with reporting requirements to begin in 2028.
Under the new proposal, the Commission also recommended delaying the adoption these standards by 2 years, in order to allow companies to focus on implementing the first set of ESRS and to limit reporting requirements, as well as to provide the European Financial Reporting Advisory Group (EFRAG) with more time to develop the new standards.
The MEPs did, however, agree to support the ideas in exchange for demanding that the standards be published before the new date, and that the Commission consult Parliament on the status of the standards’ development at least once a year.