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Implications of the Delayed EU Sustainability Reporting Standards
The European Union (EU) has implemented a sigh of relief for companies grappling with the intricacies of sustainability reporting. In a move demonstrably influenced by industry concerns, the EU Council has officially approved a two-year delay for the adoption of sector-specific European Sustainability Reporting Standards (ESRS) and sustainability reporting requirements for non-EU companies under the Corporate Sustainability Reporting Directive (CSRD).
In this blog, we will get into the nitty-gritty of this recent development, dissecting the implications for businesses and the potential impact on the evolving landscape of corporate sustainability reporting.
Why the Delay?
The initial CSRD implementation timeline mandated the adoption of sector specific ESRS by June 2024, along with sustainability reporting for large non-EU companies operating within the EU. This aggressive timeline presented a significant challenge for businesses, particularly considering the first set of European Sustainability Reporting Standards, adopted in July 2023, focused on general, sector-agnostic reporting requirements.
The EU Commission recognized the potential burden and proposed the delay in October 2023. This aligns with a core objective within their 2024 Commission Work Programme: to streamline and minimize reporting burdens for companies.
Benefits of the Delay
The extended deadline offers several advantages for businesses:
- Focus on Core European Sustainability Reporting Standards (ESRS) Implementation: Companies can now prioritize familiarizing themselves with and implementing the foundational European Sustainability Reporting Standards. This ensures a solid understanding of the core sustainability reporting framework before delving into industry-specific nuances.
- Streamlined Reporting Requirements: The delay allows for the development of more concise and effective sector specific ESRS. This translates to a more streamlined reporting process for businesses in the long run.
- Enhanced Resource Allocation: By postponing sector-specific and non-EU company ESRS, companies gain valuable time to dedicate resources to building robust sustainability reporting capabilities.
A Look at the Revised Timeline
Here’s a breakdown of the revised timeline for ESRS adoption and reporting requirements:
| Reporting Entity | Initial Deadline | Revised Deadline |
| Sector-Specific ESRS (EU Companies) | June 2024 | June 2026 |
| Non-EU Company ESRS Adoption | June 2024 | June 2026 |
| Non-EU Company Reporting Obligation | 2028 (unchanged) | 2028 (unchanged) |
A Call for Action: Early Adoption of Sector-Specific ESRS
While the deadline has shifted, there’s a crucial takeaway for sustainability leaders. The EU Council, in its agreement with the European Parliament, emphasized the importance of early adoption for sector specific European Sustainability Reporting Standards (ESRS). This signifies the EU’s commitment to a robust and comprehensive sustainability reporting framework.
Here’s what you can do:
- Stay Informed: Closely monitor the development of sector specific ESRS. Familiarize yourself with the draft versions as they become available.
- Prepare for the Future: While the official adoption is delayed, use this time to conduct a gap analysis between your current sustainability reporting practices and the anticipated requirements of the sector specific ESRS.
- Engage Stakeholders: Keep key stakeholders, such as investors and regulators, informed about your sustainability efforts and preparations for the upcoming ESRS implementation.
The Road Ahead for European Sustainability Reporting
The EU’s commitment to sustainability reporting remains unwavering. This two-year delay serves as a strategic move to ensure a more efficient and effective rollout of the European Sustainability Reporting Standards (ESRS) framework. It empowers businesses to adapt and integrate sustainability reporting seamlessly into their operations.
Embrace the Opportunity
Sustainability leaders should view this delay as an opportunity. Utilize this time to solidify your company’s sustainability practices, engage stakeholders, and prepare for a future of transparent and standardized sustainability reporting across the European market. By proactively embracing the evolving ESRS landscape, businesses can gain a competitive edge and solidify their commitment to a sustainable future.
Stay tuned for further updates! We’ll continue to provide insights and resources as the European Sustainability Reporting Standards (ESRS) framework develops.
Get in touch with Lythouse’s Sustainability experts!
Amelia Rose is a leading expert in Environmental, Social, and Governance (ESG) issues. She brings a deep understanding of ESG, sustainability, climate change, sustainable development, and corporate social responsibility to her work. Rose has extensive experience in consulting with businesses and organizations on developing and implementing effective ESG strategies. She is a passionate advocate for a greener future and believes that businesses can be a powerful force for positive change.
