Dive Brief:
- The European Commission plans to postpone its timeline for the adoption of sustainability reporting standards by two years for specific sectors and non-EU companies, according to its 2024 Commission Work Programme released Tuesday.
- The modification was made to provide an “immediate reduction in the reporting burden” for companies impacted by the reporting requirements and aligns with the commission’s overall goal of reducing burdens associated with reporting requirements by 25%.
- The delay impacts key aspects laid out in the Corporate Sustainability Reporting Directive, which went into effect in January and requires comprehensive and detailed disclosures from companies regarding their sustainability efforts. The rule also impacts U.S. companies with EU subsidiaries.
Dive Insight:
The EU’s framework for sustainability reporting and company disclosures comes at a time when investors and federal and state regulators are pushing for further transparency from businesses, but face concerns about fast implementation.
Though the EU initially proposed an ambitious deadline of June 2024 for implementing its sustainability reporting standards, it revised this timeline in order to allow stakeholders to have time to adapt to new requirements, mirroring the commission’s overall goal of decreasing reporting burdens without undermining policy objectives.
According to the 2024 proposal, the EU also plans to adjust the thresholds of the accounting directive so that over a million companies can benefit from this reduction in reporting requirements.
CSRD also impacts all companies listed on an EU-regulated market, including both EU and non-EU entities. An EU subsidiary of a U.S. company, for example, would be required to report its sustainability efforts and operations if it meets certain thresholds regarding asset, revenue and workforce figures.
Additionally, U.S.-based companies would be required to comply with the reporting standards if they generate an annual net turnover exceeding $158.6 million for two consecutive financial years or have at least one branch or subsidiary in Europe that generates an annual net turnover exceeding $42.3 million in the preceding financial year.
Separate from the delay in reporting timelines, the commission’s proposal also listed several climate-forward and sustainability initiatives, such as a wind power package, an industrial carbon management strategy and a water resilience project — all in line with the European Green Deal objective, which aims to achieve net-zero status by 2050 and reduce greenhouse gas emissions by at least 55% by 2030.
