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"Why we need to get improved corporate sustainability data by 2024", 18 January 2022
As the European Parliament and Council develop their positions on the EU Corporate Sustainability Reporting Directive (CSRD) proposal, it is of the utmost importance that policymakers support the timeline suggested by the European Commission and plans for EU sustainability reporting standards as well as guarantee public funding to support the standard-setting work.
The CSRD reform is tackling the gaps1 observed in the implementation of the previous legislation in order to address problems in the comparability, consistency and relevance of sustainability information disclosed by companies. The impact assessment accompanying the proposal and linked research from the Centre for European Policy Studies (CEPS) are both categorical in showing that mandatory sustainability reporting will bring clarity to businesses, help reduce the number of requests for sustainability information from external stakeholders and lead to a reduction in cost in the medium- and longer-term.
The EU Green Deal and Renewed Sustainable Finance strategy depend on successfully redirecting private and public capital to support the sustainability transition of the EU economy as well as adequately measuring companies’ role, performance and impact on sustainability matters. In this regard, implementing the EU standards is instrumental to help companies provide relevant information that is needed by all users of such data (including investors, financial market participants and civil society) and in line with EU public goals and commitments on climate, environment and human rights.
The EU Non-Financial Reporting Directive currently in force was approved by legislators in 2014. Due to the urgency and the central role of this reform within the broader policy context, the undersigned organisations call policy-makers to take the next step by:
Reaching agreement promptly in order to support swift implementation.The CSRD proposal clarifies the implementation of sustainability disclosure obligations, thereby providing additional and necessary certainty to companies, as well as to investors and other stakeholders (i.e ensuring compliance with respective disclosure and prudential requirements such as investors disclosing how they integrate sustainability and banks having to assess their exposure to climate risk). The reform would enter into effect in 2023, with companies actually reporting the information on sustainability risks, opportunities and impacts in 2024. In practical terms, companies would need to start collecting data from 1st January 2023 on several KPIs, including GHG emissions and energy use. Any delay will have a negative impact on the ability of companies and financial market participants to support the sustainability transition of our economy. Moreover, it will put at risk the achievement of the objectives set in the EU Green Deal and hinder the implementation of the Renewed Sustainable Finance Strategy.
Maintaining the double materiality concept to achieve EU-specific policy objectives, and demonstrating EU leadership to promote the consideration of impact globally. The EU standards must be grounded in the double materiality concept in order to align with the broader policy context (including rules on investors’ disclosure, EU taxonomy, EU Green Bonds Standard and ESG benchmarks) and achieve the EU’s commitments on sustainability and respect for human rights. Furthermore, looking at sustainability challenges at the global level, achieving international standardisation and a level playing field is important and in the interest of the EU. However, the international work led by the IFRS Foundation will not cover the full spectrum of ESG (Environmental, Social and Governance) matters at once and will look specifically at disclosures relevant for enterprise value, rather than sustainability outcomes. It is highly appreciated that the European Commission has already committed to a review process to ensure European and international standards are compatible. We stand ready to support the European Commission’s contribution to the international standard setting so that the objective of global harmonisation in reporting both risks and impacts, which is needed and required by all users of sustainability data, is achieved.
Ensuring the technical work to develop EU corporate sustainability reporting standards is appropriately supported by EU public funding.It is important that the EU Commission guarantees the viability and transparency of the standard-setting process, free of bias and undue interest, allowing all interested parties including users and preparers to engage on an equal basis.
We call on European policy-makers to maintain momentum while finalising the negotiations for the reform of the legislation. The business case for standardising sustainability reporting is undisputed as well as the importance of sustainability data as a critical cornerstone to achieve the objectives set in the EU Green Deal and the sustainable finance agenda.
The 2024 Danish Institute for Human Rights benchmark assesses the human rights policies and due diligence practices of 30 major Danish companies, measuring their alignment with global standards and contributing to discussions on responsible business conduct and the impact of upcoming EU regulations.
In their new report, frank bold shows key findings from an assessment of 100 companies’ reports in preparation for the implementation of the EU Sustainability Reporting Standards, good practice examples and recommendations to businesses, auditors and policymakers.
UNICEF’s new guidance briefs assist companies reporting under the European Sustainability Reporting Standards (ESRS) by offering insights on how to integrate children’s rights into assessments, disclosures, and reporting requirements, especially in areas such as child labor, community impacts, and protections for children as consumers.
Standardised sustainability disclosures under the CSRD are crucial for the EU's economic resilience and global leadership in sustainability, write Julia Otten and Susanna Arus of Frank Bold in Sustainable Views. Policymakers should maintain a strategic vision, focusing on long-term resilience rather than short-term expediency.
The European Commission has initiated infringement procedures against 17 EU member states for failing to meet the July 6, 2024 deadline to fully implement the Corporate Sustainability Reporting Directive (CSRD) into national law.
The agreement among EU co-legislators needs to be formally voted by the Council and EU Parliament, but is expected to be in place before the EU elections this year.
However, MEPs ensured that the Commission will strive to publish sector-specific sustainability reporting standards in eight areas as soon as they are ready before the deadline.
It of critical importance to address challenges and uncertainties currently faced by companies, as well as to ensure meaningful sustainability disclosures, the statement says.
A majority of 359 Members of the Parliament voted against a motion to reject the ESRS and its replacement with an emptied and diluted piece of legislation.
Germany is seeking to exempt thousands of Mittelstand companies from EU green reporting rules, in a move officials say risks “gutting” the bloc’s efforts to hold companies accountable for their impact on the environment.
Frank Bold calls on the Commission not to disregard the political agreement reached in 2022 on the Corporate Sustainability Reporting Directive (CSRD).
These Standards provide more detail on the Corporate Sustainability Reporting Directive adopted last year, while also updating them to align with new international climate reporting standards issued in June.
Eurosif welcomes the standards covering all Environmental, Social and Governance topics. Concerns remain over making all disclosures subject to materiality assessment.
The endorsed statement was developed jointly by the European Fund and Asset Management Association (EFAMA), the European Sustainable Investment Forum (Eurosif), the Institutional Investors Group on Climate Change (IIGCC), the PRI and the United Nations Environment Programme Finance Initiative (UNEP FI).
On 9 June, the European Commission published for public consultation a draft Delegated Act on the first set of European Sustainability Reporting Standards.
Publication by the Danish Institute for Human Rights: "How do the pieces fit in the puzzle? Making sense of EU regulatory initiatives related to business and human rights"
Sustainability reporting experts and NGOs welcome the adoption of the EU sustainability reporting standards (ESRS) by EFRAG submitted this week to the European Commission. Whilst the ambition of the ESRS remains limited in several areas, they represent a major improvement for companies as well as for users of sustainability information and address the biggest problems in quality and reliability of corporate reporting.
The European Commission will now consult EU bodies and Member States on the draft standards,
before adopting the final standards as delegated acts in June 2023, followed by a scrutiny period by the European Parliament and Council.
MEPs voted today (November 10) to confirm the agreement reached earlier this summer to strengthen companies’ obligations to disclose information on their sustainability risks and impacts, and adopt mandatory EU standards covering ESG matters
The letter, signed by 37 organisations, calls on the European Commission to uphold the legal mandate agreed in the CSRD to develop and adopt an ambitious framework to improve and standardise corporate disclosure on sustainability matters
On Tuesday 21 June, the trilogue negotiations between the European Commission, Parliament and Council concluded with an agreement for the EU Corporate Sustainability Reporting Directive (CSRD).
The EU Corporate Sustainability Reporting Directive proposal will move to the final stage of the legislative process and enter trilogue negotiations between the EU Commission, European Parliament and the Council.
NGOs together with investors and asset managers call members of the European Parliament to broaden the scope of the Corporate Sustainability Reporting Directive (CSRD) to ensure that all listed SMEs, as well as non-listed SMEs operating in high-risk sectors, are adequately incorporated in the legal framework.
The 12 signatories of this statement - who represent key users of corporate sustainability information - call on EU policymakers to promptly agree on the EU Corporate Sustainability Reporting Directive reform and support accompanying EU standards
Frank Bold's report calls on EU to strengthen Corporate Sustainability Reporting Directive to effectively address barriers to supervision and enforcement of disclosure obligations introduced by EU NFRD
Business & Human Rights Resource Centre has signed an open letter alongside Wikirate, OAR and Clean Clothes Campaign, urging EU members of Parliament and the EU Commission to adopt and incorporate open data principles into the proposed Corporate Sustainability Reporting Directive
The authors argue that respect for human rights is not just an ESG factor, but a global standard of expected conduct for all companies, including institutional investors.
The proposal presents several major improvements which are essential to help companies focus and report on meaningful information and channel finance to activities and projects needed to meet the objectives of the European Green Deal. However, it falls short on several important points, which significantly limit its desired impact.
The recommendations can successfully guide the EU standard-setting process, and significantly advance the quality of corporate sustainability transparency, says the Alliance for Corporate Transparency.
The reports set out recommendations to the European Commission for the elaboration of possible EU sustainability reporting standards and for possible changes to EFRAG's governance and funding if it were to become the EU sustainability reporting standard setter.
To contribute to a meaningful EU process for the standardisation of reporting requirements in favour of comparable, concise and relevant disclosure, the members of the Alliance for Corporate Transparency have combined their expertise and aligned on key priorities for reform of the EU NFR Directive and development of possible future standards.