The European Commission is proposing a two-year delay in implementing certain elements of the European Sustainability Reporting Standards (ESRS), set to come into force in June 2024.
The delay mainly involves the enforcement of sector-specific sustainability disclosures and extends to the mandates on sustainability reporting for companies beyond the European Union’s confines.
The Commission said it viewed the postponement as a strategic step, streamlining companies’ focus on assimilating the inaugural suite of ESRS.
It is also perceived as a window for the European Financial Reporting Advisory Group (EFRAG) to develop detailed sector-specific standards.
The Commission’s plans came to light in its 2024 Work Programme, an agenda detailing the actions slated for the forthcoming year.
The disclosures flesh out the EU’s Corporate Sustainability Reporting Directive (CSRD), which requires mandatory reporting of environmental, social and governance factors from 2024 to stop companies exaggerating their sustainability credentials.
It is a key element of its sustainable finance framework, but they are so far far reaching, mandating sustainability disclosures for approximately 50,000 companies, with the goal of enhancing transparency in corporate sustainability reporting including on climate or nature.
Centre right lawmakers are pushing back against the EU’s green agenda in general, echoing a backlash among Republicans in the US. However, gaining a majority in parliament to reject the ESRS norms is challenging.
This explains why a recent motion to scrap the ESRS from a group of over 40 members of the European Parliament, and largely supported by the European People’s Party (EPP), was defeated.
The motion argued that the disclosures proposed by the European Commission put a “high administrative burden” on companies, and also jeopardised the European Union executive’s plans to cut red tape and reporting obligations to make the EU more competitive.
© Markets Media Europe 2023
