The European Commission has announced that it has adopted the European Sustainability Reporting Standards (ESRS) – the rules and requirements for companies to report on the impact of their activities on sustainability, as well as opportunities and risks in accordance with the forthcoming EU Corporate Sustainability Reporting Directive (CSRD), thereby taking a significant step towards the implementation of the legislation. Some companies will submit such reports as early as the 2024 financial year.

While welcoming this announcement, investor groups focused on sustainability have expressed concern regarding the Commission's recent actions in relaxing several of the requirements of the new rules. In particular, concerns have been raised regarding the removal of the mandatory nature of the sustainability disclosure requirements set out in the CSRD.

The Corporate Sustainability Reporting Directive, which is planned to be applied from the beginning of 2024, is set to significantly update the 2014 Non-Financial Reporting Directive (NFRD), which is effectively the current EU sustainability reporting framework. The new rules will significantly increase the number of companies that will be required to provide information on sustainability (from the current approximately 12,000 to more than 50,000) and will introduce more detailed reporting requirements regarding companies' impact on the environment, human rights, and social standards, as well as risks related to sustainability.

The European Financial Reporting Advisory Group (EFRAG) received a mandate from the European Commission in June 2020 to prepare new EU sustainability reporting standards, and in November 2022, EFRAG submitted the final draft of the Sustainability Reporting Standards; it had amended the initial proposal to ease the administrative burden on companies and reduce the number of reporting requirements by at least half.

https://www.esgtoday.com/eu-commission-adopts-sustainability-reporting-rules/