Lhe European Commission has published the July 31 a first application text (“delegated act”) of its directive on the publication of non-financial information of companies (“Corporate Sustainability Reporting Directive”, CSRD).
These new reporting standards aim to strengthen the responsibility of companies in terms of the environment and respect for social rights; it is a crucial step towards the realization of the European Green Deal, the ultimate objective of which is to make Europe the first climate-neutral continent by 2050, to restore biodiversity and improve the quality of life of citizens.
Twelve mandatory standards
The CSRD plays a central role in ensuring that the information provided by almost 50,000 companies regarding their environmental, social and governance (ESG) performance is comparable, reliable and relevant. This is about enabling stakeholders, in particular investors, consumers and regulators, to make informed decisions in order to support and promote the sustainability of the European economy.
The text establishes twelve mandatory standards, the Environmental and Social Reporting Standards (ESRS). ESRS offer companies a coherent set of recommendations for assessing, measuring and reporting their impacts on sustainability issues such as climate change, biodiversity, human rights, business conduct, consumer and worker safety of the value chain, etc.
The ESRS also take into account ongoing discussions with the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI), in order to guarantee as much interoperability as possible between European and global standards, and thus avoid the multiplication of declarations.
However, it must be emphasized that the European Commission has backtracked on certain key obligations initially provided for in the CSRD. The guidelines established by this first implementing text highlight the compromises made.
An exception for the climate issue
First of all, businesses with fewer than 750 employees will have one more year to publish information relating to their indirect greenhouse gas emissions (scope 3, i.e. upstream and downstream emissions which are not under the company’s control). Above all, companies will ultimately only report information that they themselves assess as material, for their activities and for society in general.
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