Political agreement reached to delay adoption deadlines for sector-specific ESRS and ESRS for certain non-EU companies

The Council and the European Parliament have reached an interim decision on the European Union (EU) Commission’s proposal to delay the publication of sector-specific European Sustainability Reporting Standards (ESRS) and ESRS for third-country companies by 2 years, originally scheduled for June 2024. The proposed Directive aims to give all stakeholders, including companies and authorities, additional time to prepare for and implement the ESRS. Both EU institutions must now formally adopt the proposed Directive.

Additional information
Directive (EU) 2022/2464, also known as the Corporate Sustainability Reporting Directive (CSRD), came into effect on 5 January 2023, amending, among others, the Directive 2013/34/EU. The Member States of the European Union (EU) must transpose the CSRD Directive into national legislation within 18 months (by 6 July 2024). As of reporting year 2024, the CSRD extends the scope to more companies, including large companies and all companies listed on regulated markets. Companies must disclose information on how sustainability factors affect their business and how their business operations impact the environment and society.

Companies must report using the European Sustainability Reporting Standards (ESRS). The standards are developed by EFRAG (European Financial Reporting Advisory Group), a private association established in 2001, and adopted by the European Commission. The initial set of 12 sector-agnostic ESRS standards entered into force on 1st January 2024. The sector-specific ESRS would introduce additional disclosure requirements for particular sectors, such as mining, agriculture and oil and gas.

Under the CSRD, certain third-country companies must disclose sustainability information as of 2028 (the first report is due in 2029) using tailored ESRS for third-country companies. This applies to companies with net turnover (revenue) exceeding EUR 150 million in the EU in each of the last two years with either:
• large subsidiary undertakings, as well as small and medium-sized subsidiary undertakings, except micro undertakings, which are public-interest entities; or
• EU subsidiary/branch with net turnover (revenue) exceeding EUR 40 million