EU Lawmakers Agree to Delay Sustainability Reporting Standards for Specific Sectors and non-EU Companies by 2 Years
Lawmakers in the European Parliament and Council announced today that they have reached a provisional agreement on a directive to delay the adoption of standards for companies to provide sector-specific sustainability disclosures and for sustainability reporting from companies outside of the EU under the Corporate Sustainability Reporting Directive (CSRD).
While the deal, aimed at providing more time for companies to time to prepare for the increased reporting requirements, and for the European Financial Reporting Advisory Group (EFRAG) to develop the new standards, agrees to the proposed postponement, it also calls for the new sector standards to be published as soon as they are ready before the new 2026 deadline.
The delay was initially proposed by the EU Commission in October as part of its 2024 Commission Work Programme, which included reducing reporting burdens for companies as one of its priorities, and highlighted the postponement of the deadline for the adoption of sector-specific European Sustainability Reporting Standards (ESRS) as one of the key actions listed.
The ESRS sets out the rules and requirements for companies to report on sustainability-related impacts, opportunities and risks under the EU’s CSRD, which began applying from the beginning of 2024.
The first set of ESRS rules, which were adopted by the Commission in July 2023, set out sector-agnostic sustainability reporting requirements, while the CSRD subsequently required the adoption of sector-specific ESRS by the end of June 2024, outlining sustainability information for companies to report relating to the industries in which they operate.
The CSRD also included a requirement for large non-EU companies that operate in the EU to provide sustainability reporting, with ESRS adoption of rules applying to these businesses also initially scheduled for the end of June 2024, and with reporting requirements to begin in 2028.
The Commission recommended delaying the adoption these standards by 2 years, in order to allow companies to focus on implementing the first set of ESRS and to limit reporting requirements, as well as to provide the European Financial Reporting Advisory Group (EFRAG) with more time to develop the new standards.
The agreement marks one of the last main steps to passing the directive to delay the adoption of the standards, with the deal now requiring formal adoption by the EU Council and Parliament.
Following the agreement, Vincent Van Peteghem, Belgian Deputy Prime Minister and Minister of Finance, said:
“Today’s agreement limits reporting requirements to the minimum and gives companies time to implement the ESRS and prepare for the sectorial European Sustainability Reporting Standards.”